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Euro Currency Risk and the Geography of Debt Flows to Peripheral European Monetary Union Members

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dc.contributor.authorErsal-Kiziler, Eylem
dc.contributor.authorNguyen, Ha
dc.date.accessioned2016-07-11T15:41:17Z
dc.date.available2016-07-11T15:41:17Z
dc.date.issued2016-06
dc.description.abstractThe pattern of debt flows to peripheral European Monetary Union members seems puzzling: they are mostly indirect and channeled through the large countries of the European Monetary Union. This paper examines to what extent the introduction of the euro and the elimination of the intra-area currency risk can explain this puzzle. A three-country dynamic stochastic general equilibrium framework with endogenous portfolio choice and two currencies is developed. In the equilibrium, the core members of the European Monetary Union emerge as the main group of lenders to the peripheral European Monetary Union members. Outside lenders are pushed from the periphery debt markets because of currency risk. The model generates a pattern of debt flows consistent with the data despite the absence of any exogenous frictions or market segmentations.en
dc.identifierhttp://documents.worldbank.org/curated/en/2016/06/26541999/euro-currency-risk-geography-debt-flows-peripheral-european-monetary-union-members
dc.identifier.doi10.1596/1813-9450-7738
dc.identifier.urihttps://hdl.handle.net/10986/24655
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 7338
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectFOREIGN ASSET
dc.subjectMONETARY POLICY
dc.subjectRISKS
dc.subjectHOLDING
dc.subjectREGULATORY FRAMEWORK
dc.subjectOUTSIDE INVESTORS
dc.subjectFOREIGN ASSET POSITION
dc.subjectNOMINAL WAGE
dc.subjectEXPOSURES
dc.subjectINTERNATIONAL CAPITAL
dc.subjectBOND HOLDERS
dc.subjectINTEREST
dc.subjectINTERNATIONAL SETTLEMENT
dc.subjectRATE OF RETURN
dc.subjectMARGINAL COST
dc.subjectMONEY SUPPLY
dc.subjectINTEREST RATE
dc.subjectPORTFOLIO CHOICE
dc.subjectEXCHANGE
dc.subjectDISCOUNT RATE
dc.subjectASSET
dc.subjectPORTFOLIO
dc.subjectFOREIGN EXCHANGE RISK
dc.subjectDEFAULT RISK
dc.subjectBONDS
dc.subjectEUROPEAN MONETARY UNION
dc.subjectEQUILIBRIUM
dc.subjectLOAN
dc.subjectDISCOUNT
dc.subjectBUDGET CONSTRAINTS
dc.subjectBORROWERS
dc.subjectASSET POSITIONS
dc.subjectPORTFOLIO CHOICES
dc.subjectASSET POSITION
dc.subjectINTERNATIONAL BANK
dc.subjectLENDER
dc.subjectBUDGET
dc.subjectCENTRAL BANK
dc.subjectSTEADY STATE
dc.subjectMONEY HOLDING
dc.subjectEXOGENOUS SHOCKS
dc.subjectCREDIT RATINGS
dc.subjectCURRENCY
dc.subjectTRADABLE GOOD
dc.subjectPORTFOLIOS
dc.subjectMONEY
dc.subjectDEBTS
dc.subjectMONETARY UNION
dc.subjectBANK DEBT
dc.subjectMONEY HOLDINGS
dc.subjectMARKETS
dc.subjectDEBT
dc.subjectRETURN
dc.subjectFOREIGN ASSETS
dc.subjectSETTLEMENT
dc.subjectDEBT FLOWS
dc.subjectCONSUMPTION EXPENDITURE
dc.subjectOPEN ECONOMY
dc.subjectBUSINESS CYCLE
dc.subjectLENDERS
dc.subjectINTERNATIONAL DEBT
dc.subjectFOREIGN LENDER
dc.subjectINTERNATIONAL ECONOMICS
dc.subjectLOANS
dc.subjectBOND HOLDER
dc.subjectCRISIS COUNTRIES
dc.subjectFINANCE
dc.subjectNEGATIVE SHOCK
dc.subjectLIBERALIZATION
dc.subjectBAILOUT
dc.subjectINFORMATION ASYMMETRY
dc.subjectDEBT HOLDINGS
dc.subjectEXPENDITURE
dc.subjectMARKET SEGMENTATIONS
dc.subjectINTERNATIONAL BORROWING
dc.subjectEQUITY
dc.subjectTRANSACTION
dc.subjectINVESTORS
dc.subjectCONSUMPTION
dc.subjectGENERAL EQUILIBRIUM
dc.subjectSOVEREIGN DEBT
dc.subjectOUTSIDE LENDERS
dc.subjectMARKET SEGMENTATION
dc.subjectBOND MARKETS
dc.subjectGOOD
dc.subjectGLOBAL BOND
dc.subjectTRADABLE GOODS
dc.subjectBOND PORTFOLIO
dc.subjectSTATE BOND
dc.subjectRETURNS
dc.subjectBOND MARKET
dc.subjectRISK EXPOSURE
dc.subjectECONOMY
dc.subjectBOND PORTFOLIOS
dc.subjectAGGREGATE CONSUMPTION
dc.subjectSHARES
dc.subjectASSETS
dc.subjectREAL EXCHANGE RATE
dc.subjectTRANSACTION COSTS
dc.subjectMARKET
dc.subjectDEFAULT
dc.subjectFOREIGN EXCHANGE
dc.subjectPUBLIC DEBT
dc.subjectINTERNATIONAL PORTFOLIO
dc.subjectMARKET STRUCTURES
dc.subjectCREDIT RISK
dc.subjectEXPOSURE
dc.subjectHOLDINGS
dc.subjectINSURANCE
dc.subjectBUSINESS CYCLES
dc.subjectCURRENCIES
dc.subjectDEBT MARKETS
dc.subjectDEBT MARKET
dc.subjectEQUITY HOLDINGS
dc.subjectGOODS
dc.subjectINVESTOR
dc.subjectSTOCKS
dc.subjectINVESTMENT
dc.subjectDOLLAR PRICES
dc.subjectRISK
dc.subjectBOND
dc.subjectSOVEREIGN BONDS
dc.subjectSHARE
dc.subjectCOLLATERAL
dc.subjectPORTFOLIO HOLDINGS
dc.subjectSUPPLY
dc.subjectCURRENCY RISK
dc.subjectMONEY MARKET
dc.subjectPORTFOLIO INVESTMENT
dc.subjectINVESTMENTS
dc.subjectLENDING
dc.subjectNOMINAL INTEREST RATE
dc.subjectEXCHANGE RATE RISK
dc.subjectEXCHANGE RATE
dc.subjectRISK AVERSION
dc.subjectSECONDARY MARKET
dc.subjectLIABILITIES
dc.subjectHEDGE
dc.subjectDOMESTIC INVESTORS
dc.subjectWEIGHTS
dc.subjectCONSUMPTION BASKET
dc.subjectCLARITY
dc.subjectDOLLAR VALUE
dc.subjectECONOMIES
dc.subjectINVESTING
dc.titleEuro Currency Risk and the Geography of Debt Flows to Peripheral European Monetary Union Membersen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crossref.titleEuro Currency Risk and the Geography of Debt Flows to Peripheral European Monetary Union Members
okr.date.disclosure2016-06-30
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://documents.worldbank.org/curated/en/2016/06/26541999/euro-currency-risk-geography-debt-flows-peripheral-european-monetary-union-members
okr.guid363991467292250353
okr.identifier.doi10.1596/1813-9450-7738
okr.identifier.externaldocumentum090224b08441e50b_1_0
okr.identifier.internaldocumentum26541999
okr.identifier.reportWPS7738
okr.importedtrue
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2016/06/30/090224b08441e50b/1_0/Rendered/PDF/Euro0currency00netary0union0members.pdfen
okr.region.administrativeEurope and Central Asia
okr.region.geographicalEastern Europe
okr.region.geographicalEurope
okr.region.geographicalEuropean Union
okr.topicFinance and Financial Sector Development::Currencies and Exchange Rates
okr.topicFinance and Financial Sector Development::Financial Intermediation
okr.topicMacroeconomics and Economic Growth::Economic Theory & Research
okr.topicFinance and Financial Sector Development::Debt Markets
okr.unitMacroeconomics and Growth Team, Development Research Group
relation.isAuthorOfPublicationc1c4d7c1-b16a-5f9a-a0ac-f855e347728a
relation.isAuthorOfPublication.latestForDiscoveryc1c4d7c1-b16a-5f9a-a0ac-f855e347728a
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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