CIAO DATE: 08/2014

ECB Policy and Eurozone Fragility: Was De Grauwe Right?

June 2014

Centre for European Policy Studies

Abstract

The authors test Paul De Grauwe’s eurozone fragility hypothesis using a time window around the announcement of the Outright Monetary Transactions (OMT) programme. The findings reveal significant contagion from Spain to other eurozone countries, but solely during the pre-announcement period. The authors conclude that in this case the OMT programme has succeeded in mitigating the self-fulfilling dynamics within the eurozone.

Resource link: ECB Policy and Eurozone Fragility: Was De Grauwe Right? [PDF] - 4.4M