A Flow of Funds Perspective on the Financial Crisis Volume II Macroeconomic Imbalances and Risks to Financial Stability

by Winkler, Bernhard; van Riet, Ad; Bull, Peter

• ISBN13: 9781137353009
• ISBN10: 1137353007
• Format: Hardcover
• Copyright: 2013-11-29
• Publisher: Palgrave Macmillan

Summary

Flow-of-funds accounts are a component of the national accounts system reporting the financial transactions and balance sheets of the economy, classified by sectors and financial instruments. The biggest financial crisis in a lifetime has shown how important it is to have a deep knowledge of the financial balance sheets of the main sectors of the economy and the financial flows that take place between them. This type of information is essential for a proper understanding of the transmission of monetary and financial shocks through the economy and to identify macroeconomic imbalances that could undermine financial stability.

This publication takes a flow-of-funds perspective of the financial crisis. The book illustrates the broad range of interlinkages between the financial side and the real side of the economy and highlights the role of balance sheet variables and sectoral balance sheet positions in the evolution of the financial crisis, covering the United States, the Eurozone, the United Kingdom, Japan and Slovenia. The authors also reflect on the use of financial data in the context of diagnosing and addressing excessive macroeconomic imbalances in Europe and on the use of financial accounts to underpin the analysis of systemic risks in the financial system. In this respect, the flow of funds offers a framework for looking at the right kind of questions when policy-makers consider how to prevent, manage and resolve financial crises.

Author Biography

Bernhard Winkler worked at the Deutsche Bundesbank before joining the European Central Bank (ECB) in July 1998 as Economist in the Directorate-General Research. Subsequently he held positions as Senior Economist in the Monetary Policy Strategy Division and in the Counsel to the Executive Board as Adviser to Prof. Otmar Issing. Since May 2005 he has been Senior Adviser in the Directorate Monetary Policy responsible, inter alia, for flow-of-funds analysis at the ECB and the co-ordination of financial projections as part of the quarterly macroeconomic projections exercises. He has published on issues relating to monetary and fiscal policy in a monetary union, on monetary policy communication and on the Stability and Growth Pact as well as on cross-checking and the flow of funds.

Ad van Riet joined De Nederlandsche Bank as Economist in 1987 and took up a (Senior) Economist position at the European Monetary Institute in 1994. He joined the European Central Bank as Principal Economist when it was established in 1998 and was then in charge of the Monetary Policy Stance Unit. He became Head of the EU Countries Division in 2000 and Head of the Fiscal Policies Division in 2007. Since September 2011 he has been Senior Adviser in the Directorate General Economics and Secretary of the ECB Occasional Paper Series. He has published on European money demand, fiscal policy and structural reforms.

Peter Bull joined the Bank of England in 1964. After some years in the economics, international and foreign exchange areas, he moved to statistics, latterly as Head of the Statistics Department in 1987-94. In 1994 he joined the European Monetary Institute in Frankfurt as Head of Statistics, and remained as Director General Statistics when the European Central Bank was established in 1998. After retirement in autumn 2002 he has continued to work on related matters in the ECB and elsewhere. His more recent publications are in the field of national accounts and statistics.

Table of Contents

Foreword; Vítor Constâncio
1. Introduction and Overview; Bernhard Winkler, Ad van Riet and Peter Bull
PART I: FLOW OF FUNDS AND MACROFINANCIAL ANALYSIS
2. Tobin LIVES; John Duca and John Muellbauer
3. Balance sheets in The Great Moderation; Richard Barwell and Oliver Burrows
4. Japan's Flow of Funds Accounts; Shuji Kobayakawa and Ryoichi Okuma
5. Financial Accounts - the Case of Slovenia; Janez Fabijan
PART II: FLOW OF FUNDS AND MACROECONOMIC IMBALANCES IN EUROPE
6. The Financial Crisis in the Light of Euro Area Accounts; Philippe de Rougemont and Bernhard Winkler
7. The Surveillance of Macroeconomic Imbalances in the EU; Carlos Cuerpo and Alexandr Hobza
8. Debt, Assets and Imbalances in the Euro Area; Christophe Van Nieuwenhuyz
PART III: FLOW OF FUNDS AND FINANCIAL STABILITY
9. Systemic Risk Contingent Claims Analysis; Nuno Silva, Nuno Ribeiro and António Antunes
10. Financial Accounts and Financial Stability in Lithuania; Virgilijus Rutkauskas
11. Financial Linkages of the Financial Sector in Austria; Michael Andreasch