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Palgrave Macmillan

A Flow-of-Funds Perspective on the Financial Crisis Volume II

Macroeconomic Imbalances and Risks to Financial Stability

ISBN 9781137353009
Publication Date November 2013
Formats Hardcover Ebook (EPUB) Ebook (PDF) 
Publisher Palgrave Macmillan
Series Palgrave Macmillan Studies in Economics and Banking

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.

Bernhard Winkler is Senior Adviser in the Directorate Monetary Policy at the European Central Bank, responsible, inter alia, for flow-of-funds analysis 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, monetary policy communication and the Stability and Growth Pact as well as on cross-checking and the flow of funds.

Ad van Riet is Senior Adviser in the Directorate General Economics at the European Central Bank, and Secretary of the ECB Occasional Paper Series. He has published on European money demand, fiscal policy and structural reforms.

Peter Bull joined the European Monetary Institute in Frankfurt as Head of Statistics in 1994, 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.

Foreword; Vítor Constâncio
1. Introduction and Overview; Bernhard Winkler, Ad van Riet and Peter Bull
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
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 Nieuwenhuyze
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

Vítor Constâncio, European Central Bank, Germany
John Duca, Federal Reserve Bank of Dallas and Southern Methodist University, USA
John Muellbauer, Nuffield College and Oxford Martin School, UK
Richard Barwell, Royal Bank of Scotland, UK
Oliver Burrows, Bank of England, UK
Shuji Kobayakawa, Bank of Japan, Japan
Ryoichi Okuma, Bank of Japan, Japan
Janez Fabijan, Bank of Slovenia, Slovenia
Philippe de Rougemont, European Central Bank, Germany
Carlos Cuerpo, European Commission, Belgium
Alexandr Hobza, European Commission, Belgium
Christophe Van Nieuwenhuyze, National Bank of Belgium, Belgium
Nuno Silva, Banco de Portugal, Portugal
Nuno Ribeiro, Banco de Portugal, Portugal
António Antunes, Banco de Portugal, Portugal
Virgilijus Rutkauskas, Bank of Lithuania, Lithuania
Michael Andreasch, Oesterreichische Nationalbank, Austria


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