FIRSTRUN deliverable 1.5 published: International financial markets and shock absorption in the euro area

Abstract:
This deliverable investigates the role of financial markets in smoothing the impact of asymmetric shocks in the euro area. The first part offers an assessment of international risk-sharing through international capital markets relative to other mechanisms and compares the euro area to the United States. The second part focuses on the role of international credit markets in providing consumption smoothing, as opposed to inter-state risk-sharing. In doing this, it distinguishes the part driven by policies of the governments from that associated with private sector’s behaviour, and emphasizes the difference between domestic absorption and borrowing in international markets.

Authors:
Cinzia Alcidi (CEPS)
Paolo D’Imperio (CEPS)
Gilles Thirion (CEPS)