Financial Intermediation Resource allocation and macroeconomic interdependence

Presented at part of the ADEMU Project at the Macroeconomic and Financial Imbalances and Spillovers Workshop June 2017

1. FINANCIALINTERMEDIATION,RESOURCEALLOCATION,AND
MACROECONOMIC INTERDEPENDENCE
Galip Kemal Özhan
University of St Andrews
June 8, 2017
Barcelona GSE Summer Forum
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 1

2. INTRODUCTION
Table: Domestic credit outstanding at the end of the period - per GDP
GermanyIrelandSpainPortugal
2000 106 100 87 110
2004 101 126 111 124
2008 95 202 171 151
Source: Giavazzi and Spaventa (2010)
Current account imbalances
Sectoral unit labor costs
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 2

3. CURRENT ACCOUNT AND ALLOCATION OF CREDIT
Longer series
Source: Eurostat and Bank of Spain. Notes: Tradables include industry (excluding construction), agriculture, and fisheries. Non-tradables
include construction and services.
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 3

4. SHARES OF SECTORS IN OVERALL GVA
Longer series
Source: Eurostat. Notes: Non-tradables include construction, wholesale and retail trade, transport, accommodation, food service and real
estate activities. Tradables include industry (excl. const.), agriculture, forestry and fishing.
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 4

5. INTERPRETATIONS
Optimism about the future state of the economy (Blanchard, 2006,
Blanchard and Giavazzi, 2002, Constâncio, 2005)
IInvestment and output boom
ILarge current account deficits financed by bank lending
Increase in the value of non-financials starting from 1998 (Bris,
Koskinen, and Nilsson, 2009, 2012)
The Global Financial Crisis raised suspicions (Eichengreen, 2010,
Giavazzi and Spaventa, 2010, Merler and Pisani-Ferry, 2012)
ICapital flow reversals, collapse of bank lending and output
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 5

6. QUESTIONS
What is the role ofthe financial sectorin affecting domestic resource
allocation and cross-border capital flows?
Doesdomestic allocation of foreign borrowingmatter for the current
account?
What are the implications ofunconventional policywhen the economy is
suffering from sudden reversals of capital flows?
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 6

7. WHATIDO(1)
Developing a two-country quantitative macro model with a financial
sector, in which intermediaries lend funds to be invested in traded or
non-traded sector capital, and borrow from households in both countries
IDistinguishing between goods produced in each country
IIncomplete international financial markets (deposits)
IAsset heterogeneity within an economy
IOccasionally binding endogenous leverage constraints
(Benigno and Thoenissen, 2008, Corsetti, Dedola, and Leduc, 2008, Gertler
and Karadi, 2011, Gertler and Kiyotaki, 2010)
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 7

8. WHATIDO(2)
Conducting experiments when agents are optimistic about future value of
capital and capturing non-traded-sector-led boom-bust cycles (similar to
formulation in Beaudry and Portier, 2006, Christiano et al., 2010)
IAnticipations about higher value of assets (capital): Borrowing and credit
expansion
INews turn out to be incorrect: Collapse in investment, bank lending,
output; jump in credit spreads
Fluctuations based solely on optimism and disappointment (Pigou, 1927,
Keynes, 1936; Abreu and Brunnermeier, 2012, Brunnermeier and
Oehmke, 2013)
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 8

9. WHATIDO(3)
Studying unconventional monetary policy (UMP) conducted by a
common central bank: Direct asset purchases and liquidity facilities
IIn response to unfulfilled expectations
IToward sector-specific conditions
IFunded by interest-bearing reserves
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 9

10. NEW INSIGHTS
Model’s non-linear solution that captures the state dependent fluctuations is
crucial for explaining the consensus narrative. When leverage constraints
bind:
Stronger financial accelerator:demand channel
Bank portfolio problem:intra-national spillover channel
International incomplete markets:international spillover channel
UMPs in response to unfulfilled news are successful at preventing output to
fall further
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 10

11. NEW INSIGHTS
Model’s non-linear solution that captures the state dependent fluctuations is
crucial for explaining the consensus narrative. When leverage constraints
bind:
Stronger financial accelerator:demand channel
Bank portfolio problem:intra-national spillover channel
International incomplete markets:international spillover channel
UMPs in response to unfulfilled news are successful at preventing output to
fall further
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 10

12. PREVIEW OF THE MODEL OUTCOME
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 11

13. PREVIEW OF THE MODEL OUTCOME (CONT’D)
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 12

14. THE MODEL
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 13

15. HOUSEHOLDS
gfraction of household members are bankers,1!gare workers
Workers and bankers bring their wages and profits to their household
Perfect consumption insurance within households
To limit the bankers’ ability to overcome financial constraints:
Iwith probability1!!, bankers switch occupation every period
Inew bankers receive start-up funds from their household
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 14

16. HOUSEHOLDS
Expected intertemporal utility:
E0
1X
t=0
"
t
2
6
6
6
6
6
4
C
1!⇢
t
1!⇢
!$
*
.
,
L
1+'1
T,t
1+'1
+
L
1+'2
NT,t
1+'2
+
/
-
3
7
7
7
7
7
5
Consumption baskets:
Ct=

a
1

T
C
(!1)

T,t
+(1!aT)
1
C
(!1)

NT,t
.

!1
CT,t=

a
1
!
H
C
(!!1)
!
H,t
+(1!aH)
1
!C
(!!1)
!
F,t
.
!
!!1
Budget constraint:
Ct+Bt+1+⇠tB⇤,t+1+
⌘
2
⇠t(B⇤,t+1)
2
=(1+rt)Bt+(1+r
⇤
t
)⇠tB⇤,t+wT,tLT,t+wNT,tLN,t+⇧t+T
f⇤
t
+Tt
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 15

17. FIRMS
Goods producers:
Yi,t=e
ai,t
(e
i,t
Ki,t)
↵
Li,t
1!↵
Expected discounted profits:
Et
P
1
s=t"
s
⇤s,s+1[RPii,s+1Yi,s+1+Qi,s+1(1!')e
is+1
Ki,s+1
!wi,s+1Li,s+1!(1+rk,i,s+1)Qi,sKi,s+1]
FOCs:
"Et[⇤t,t+1
#
1+ri,k,t+1
$
]="Et
2
6
6
6
6
6
4
⇤t,t+1
*
.
,
RPii,t+1↵
Yi,t+1
Ki,t+1
+(1!')e
i,t+1
Qi,t+1
Qi,t
+
/
-
3
7
7
7
7
7
5
RPii,t+1(1!↵)
Yi,t+1
Li,t+1
=wi,t+1,
where⇤t,t+1=
UC(t+1)
UC(t)
,andi2{T,NT}and ii2{H,NT}.
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 16

18. FIRMS
Capital producers:
Objective:
MaxIi,t
Qi,tKi,t+1!Qi,t(1!')e
i,t
Ki,t!Ii,t
Constraint:
Ki,t+1=(1!')e
i,t
Ki,t+Ii,t!f

Ii,t
e
i,tKi,t
!
e
i,t
Ki,t
Q relation for investment:
Qi,t=
1
1!fI
✓
Ii,t
e

i,tKi,t
◆
e
i,tKi,t
(Bocola, 2015 and Mimir, 2015)
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 17

19. FINANCIAL INTERMEDIARIES
Balance sheet:
QT,tST,t(j)+QNT,tSNT,t(j)=Bt+1(j)+B
⇤
t+1
(j)+Nt(j) (1)
Evolution of net worth:
Nt+1(j)=(1+rk,T,t+1)QT,tST,t(j)+(1+rk,NT,t+1)QNT,tSNT,t(j)
!(1+rt+1)(Bt+1(j)+B
⇤
t+1
(j))
(2)
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 18

20. FINANCIAL INTERMEDIARIES
Expected discounted value at the time:
MaxSi,t,Bt+1,B
⇤
t+1
Vt(j)=Et"⇤t,t+1[(1!!)Nt+1(j)+!Vt+1(j)]
s.to(1),(2),and(IC)
Incentive constraint (IC):
Vt(j)%)TQT,tST,t(j)+)NTQNT,tSNT,t(j)
where⇤t,t+1=
UC(t+1)
UC(t)
.
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 19

21. FINANCIAL INTERMEDIARIES
Guess and verify:Vt(j)=⌫tNj,t
FOCs:
"E
t[⇤t,t+1⌦t+1(rk,T,t+1!rt+1)]=µt)T
"E
t[⇤t,t+1⌦t+1(rk,NT,t+1!rt+1)]=µt)NT
where⌦t⌘[(1!!)+!*t]
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 20

22. FINANCIAL INTERMEDIARIES
µt=max
(
1!

"Et[⇤t,t+1⌦t+1(1+rt+1)Nt]
)TQT,tST,t+)NTQNT,tSNT,t
!
,0
)
Withµt=08t, banking is frictionlessand⌦t=1
Withµt>0, IC is binding and the cost of capital is higher than in the
frictionless case
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 21

23. FINANCIAL INTERMEDIARIES
The IC places a restriction on the size of the bank’s portfolio relative to its net
worth:
QT,tST,t(j)+
&NT
&T
QNT,tSNT,t(j)
Nt(j)

⌫t
)T
Bank leverage is constrained at the point where the gain from running away
with assets is balanced with the cost of default
Aggregation
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 22

24. BELIEF-DRIVEN DYNAMICS
The shock specification assumes an anticipated (u
A
i,t!n
) and an unanticipated
component (u
U
i,t
):
i,t=⇢ i,t!1+u
A
i,t!n
+u
U
i,t
Ifu
U
i,t
=!u
A
i,t!n
att=n, then anticipations are not realized
(Beaudry and Portier, 2006, Christiano et al. 2010)
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 23

25. CALIBRATION
Parameter Value Comments
Discount factor ' 0.995 Standard RBC value
Risk aversion coefficient ⇢ 2 Standard RBC value
Relative weight of labor $ 5.584 Gertler and Kiyotaki (2010)
Frisch elasticity (T Sector) '1 0.276 Gertler and Karadi (2011)
Frisch elasticity (NT Sector) '2 0.276 Gertler and Karadi (2011)
Deposit adjustment ⌘ 0.025 Standard RBC value
Elasticity of substitution between Home and Foreign goods! 1.2 Standard RBC value
Elasticity of substitution between traded and non-traded goods 1 Drozd and Nosal (2010)
Investment adjustment '
K
5 BGG (1999)
Depreciation + 0.025 Standard RBC values
Home bias a
H
0.55 To match the data
Share of tradable sector a
T
0.55 To match the data
Share of capital in production ↵ 0.333 Standard RBC value
Exit probability of banks , 0.975 Bank survival of 10-years
Fraction of start-up funds " 0.0001 To min the effect of bank entry
T sector moral hazard &
T
0.4126 Steady state excess return
in NT sector of 50bps,
NT sector moral hazard &
NT
0.2063 in T sector of 100bps
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 24

26. CALIBRATION(CONT’D)
Adjust the expected valuation in assets to match the cumulative banking
exposure to traded and non-traded sectors between 1999:QIV-2008:QI
Adjustment implies a 25.5% expected valuation in NT assets (with a 0.55
correlation with T assets)
Qualitative results not dependent on this specific calibration
Steady state leverage
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 25

27. MODEL PERFORMANCE
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28. MODEL PERFORMANCE (CONT’D)
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 27

29. THREE MODEL VERSIONS
No banking, under financial autarky
RPH,tC
⇤
H,t
=
RPF,t
⇠t
CF,t
Domestic banking, under financial autarky
QT,tST,t(j)+QNT,tSNT,t(j)=Bt+1(j)+Nt(j)
RPH,tC
⇤
H,t
=
RPF,t
⇠t
CF,t
International deposit market integration
QT,tST,t(j)+QNT,tSNT,t(j)=Bt+1(j)+B
⇤
t+1
(j)+Nt(j)
CAt=⇠t
#
B⇤,t+1!B⇤,t
$
!
⇣
B
⇤
t+1
!B
⇤
t
⌘
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 28

30. INSPECTING THE MECHANISM (1)
Key mechanism:
QT,tST,t+
)NT
)T
QNT,tSNT,t=
⌫t
)T
Nt
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 29

31. INSPECTING THE MECHANISM (2)
Linear vs Non-linearWage differentialsPercent contributions
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 30

32. INSPECTING THE MECHANISM (3)
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 31

33. UNCONVENTIONAL MONETARY POLICY
ECB used its powers as a lender of last resort in reaction to the crisis
IConducted twenty LTROs with three and six month maturity between
April 2008 and October 2011
IAdditional program of outright purchases of asset-backed-securities on
November 21, 2014
UMP substitutes central bank intermediation for private bank
intermediation
ICentral bank is more efficient in raising funds: Barro-Sargent-Wallace
Irrelevance Proposition
CB issues debt to banks to fund the UMP: Interest-bearing reserves
Eurosystem balance sheet
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 32

34. UNCONVENTIONAL MONETARY POLICY
ECB used its powers as a lender of last resort in reaction to the crisis
IConducted twenty LTROs with three and six month maturity between
April 2008 and October 2011
IAdditional program of outright purchases of asset-backed-securities on
November 21, 2014
UMP substitutes central bank intermediation for private bank
intermediation
ICentral bank is more efficient in raising funds: Barro-Sargent-Wallace
Irrelevance Proposition
CB issues debt to banks to fund the UMP: Interest-bearing reserves
Eurosystem balance sheet
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 32

35. PRIVATE ASSET PURCHASES
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 33

36. PRIVATE ASSET PURCHASES
CB balance sheet:
QT,tS
g
T,t
+QNT,tS
g
NT,t
=B
g
t
+⇠tB
⇤g
⇤,t
whereS
g
T,t
='
ump
T,t
ST,t, andS
g
NT,t
='
ump
NT,t
SNT,t
Rule:ˆ'
ump
NT,t
=⇢
'
ump
NT
ˆ'
ump
NT,t!1
+u
ump
NT,t
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 34

37. PRIVATE ASSET PURCHASES (CONT’D)
Bank balance sheets:
QT,tS
p
T,t
(j)+QNT,tS
p
NT,t
(j)
| {z }
Private Assets
+ B
g
t
(j)
|{z}
Interest-Bearing Claims
=Bt+1(j)+B
⇤
t+1
(j)+Nt(j)
IC:
Vt(Nt(j))%)TQT,tST,t(j)+)NTQNT,tSNT,t(j)+)ECBB
g
t
(j)
UMP friction does not apply to Foreign banks: Home may exit the EZ
and Home banks divert assets in that case
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 35

38. PRIVATE ASSET PURCHASES (CONT’D)
Private asset purchases relax bank balance sheet constraints:
µt=max
8>
<
>
:
1!
*
,
"Et[⇤t,t+1⌦t+1(1+rt+1)Nt]
)TQT,tS
p
T,t
+)NTQNT,tS
p
NT,t
+)ECBB
g
t
+
-
,0
9>
=
>
;
If the constraint is not binding, CB purchases are neutral, and therefore
inefficient
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 36

39. LIQUIDITY FACILITIES
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 37

40. LIQUIDITY FACILITIES
Bank balance sheets:
Q
T,tS
T,t(j)+Q
NT,tS
NT,t(j)+B
g
t
(j)=Bt+1(j)+B
⇤
t+1
(j)+ Mt+1(j)
| {z }
Discount Window Lending
+Nt(j)
IC:
Vt(Nt(j))%)
TQ
T,tS
T,t(j)+)
NT(Q
NT,tS
NT,t(j)!Mt+1)+)
ECB(B
g
t
(j)!Mt+1(j))
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 38

41. LIQUIDITY FACILITIES(CONT’D)
Liquidity injections relax bank balance sheet constraints:
µt=max
(
1!

"Et[⇤t,t+1⌦t+1(1+rt+1)Nt]
)TQT,tST,t+)NTQNT,tSNT,t+)ECBB
g
t
!()ECB+)NT)Mt+1
!
,0
)
Mt+1: Central bank loans that are carried intot+1
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 39

42. MODEL PERFORMANCE UNDER UMPS
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43. MODEL PERFORMANCE UNDER UMPS(CONT’D)
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 41

44. UMPCOMPARISON
Relaxation of binding constraints (AP)
Relaxation of binding constraints (LF)
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 42

45. CONCLUSIONS
The model is successful at producing a boom-bust cycle that is
reminiscent of the recent situations in Spain
Three main channels in explaining the mechanism:
IDemand Channel
IBank Spillover Channel
IInternational Deposit Market Channel
ECB-type UMP is successful at mitigating the fall in bank lending and
output
A rigorous treatment of the consensus view of what caused the EZ Crisis
(Baldwin and Giavazzi (2015))
I“Capital flows fed non-traded portion of the economy, and the effects of
sudden-reversals were amplified due to bank dominance”
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 43

46. CURRENT ACCOUNT IMBALANCES :CORE VSPERIPHERY
(BNUSD)
Source: IMF World Economic Outlook, October 2015. Notes: Core includes Austria, Finland, Germany,
and the Netherlands. Periphery includes Greece, Italy, Portugal, Spain, and Ireland.
Back
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 44

47. SECTORAL UNIT LABOR COSTS :LOG DIFFERENCES
2000-08
Source: IMF World Economic Outlook
Back
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 45

48. CURRENT ACCOUNT AND THE ALLOCATION OF CREDIT
Back
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 46

49. SHARES OF SECTORS IN OVERALL GVA
Back
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 47

50. FINANCIAL INTERMEDIARIES
Aggregation:
Nt=Nx,t+Nn,t
with
Nx,t=![(1+rk,T,t)QT,t!1ST,t!1+(1+rk,NT,t)QNT,t!1SNT,t!1
!(1+rt)(Bt+B
⇤
t
)],
Nn,t="(1!!)[(1+rk,T,t)QT,t!1ST,t!1
+(1+rk,NT,t)QNT,t!1SNT,t!1]
Back
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 48

51. STEADY-STATE LEVERAGE
Back
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 49

52. THE ROLE OF OCCASIONALLY BINDING CONSTRAINTS
Back
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 50

53. WAGE DIFFERENTIALS
Back
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 51

54. %CONTRIBUTIONS
Boom Regime
YT YNT
Barebone 45.4%88.8%
+Banking 8.7%1.9%
+Int fin markets45.8%9.2%
Bust Regime
YT YNT
Barebone 10.1%68%
+Banking 52.9%13%
+Int fin markets36.9%18.9%
Back
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 52

55. EUROSYSTEM LIABILITIES
Source: European Central Bank
Back
GALIPKEMALOZHAN FINANCIALINTERMEDIATION,RESOURCEALLOCATION,ANDMACROINTERDEPENDENCE 53