Wednesday, July 8, 2015: 4:00 PM-5:45 PM
S10 (13 rue de l'Université)
Financial and credit market instability triggered significant economic and political crises for European and OECD countries in the late 2000s. Considering not only the Euro crisis but also wider trends in the political economy of financial market liberalization before the crisis, this panel examines both the causes and consequences of financial instability in Europe. The first two papers focus on the consequences of financial instability. Paper 1 focuses on how the European debt crisis and financial instability more widely contributed to a common, negative perception of peripheral European economies, and examines whether these economies, and their bond yields, have been successful in shedding their “PIIGS” classification over time. Paper 2 examines the vicious cycle between electoral instability and variations in long-term interest rates within Eurozone and non-Eurozone countries. The third and fourth papers highlight the causes of financial instability, focusing on real estate bubbles. Paper 3 examines supply side determinants of household and financial indebtedness within European member-states by focusing on the diversity of national policies aimed at managing credit accumulation, and the factors that lead policy makers’ to have more tolerance towards credit-fueled economic expansion. Paper 4 centers on the demand-side determinants of asset-price bubbles in housing markets. The authors examine the influence of corporatist wage-setting institutions in taming the demand for credit, and suggest that coordinated wage setting institutions can prevent the emergence of housing bubbles via their restraining effect on national incomes.
Alison Johnston and Aidan Regan
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