The Role of Uncertainty in the Euro Crisis - a Reconsideration of Liquidity Preference Theory

Abstract: An active role of fiscal policy has been rediscovered as a crisis remedy at the beginning of the financial crisis all over Europe. More recently, the Euro Crisis with its mounting governments' funding costs for a number of Southern EU member states and Ireland has called this strategy into question. As opposed to this view, the main point of this contribution is to elaborate a link between rising sovereign risk premia in the Eurozone and a major feature of the financial crisis - which culminated in elevated uncertainty after the Lehman collapse. Theoretically, this link is developed with a reference to Keynes' liquidity preference theory. Empirically, a high explanatory power of rising uncertainty in financial markets and detrimental effects of fiscal austerity for the evolution of sovereign risk spreads are demonstrated by means of panel regressions and supplementary correlation analyses

Location
Deutsche Nationalbibliothek Frankfurt am Main
Extent
Online-Ressource, 18 S.
Language
Englisch
Notes
Veröffentlichungsversion

Bibliographic citation
ZÖSS Discussion Paper ; Bd. 31

Classification
Wirtschaft
Keyword
Liquiditätspräferenztheorie
Finanzkrise
Finanzpolitik
Öffentliche Schulden
Länderrisiko
Kapitalmarkt
Risikoprämie
Öffentlicher Haushalt
Konsolidierung
Verschuldungsgrenze
Eurozone

Event
Veröffentlichung
(where)
Hamburg
(when)
2012
Creator
Contributor
Universität Hamburg, Fak. Wirtschafts- und Sozialwissenschaften, FB Sozialökonomie, Zentrum für Ökonomische und Soziologische Studien (ZÖSS)

URN
urn:nbn:de:0168-ssoar-59841-5
Rights
Open Access unbekannt; Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
Last update
14.08.2025, 10:52 AM CEST

Data provider

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Associated

  • Pusch, Toralf
  • Universität Hamburg, Fak. Wirtschafts- und Sozialwissenschaften, FB Sozialökonomie, Zentrum für Ökonomische und Soziologische Studien (ZÖSS)

Time of origin

  • 2012

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