Debunking the Myth of Southern Profligacy. A DSGE Analysis of Business Cycles in the EMU's Big Four

36 Pages Posted: 7 Nov 2017 Last revised: 20 Dec 2018

See all articles by Alice Albonico

Alice Albonico

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS); Università degli Studi di Milano-Bicocca - Center for European Studies (CefES)

Roberta Cardani

European Union - JRC-Ispra, European Commision

Patrizio Tirelli

Department of Economics and Management; Università degli Studi di Milano-Bicocca - Center for European Studies (CefES)

Date Written: November 3, 2017

Abstract

We investigate the drivers of EMU big fours' business cycles in a DSGE model. Our approach allows to disentangle the role of demand and technology shocks, where the latter may generate permanent consequences on national productivity levels. For the years before the financial crisis we cannot find evidence of a demand-driven boom in Spain and Italy relative to what happened in France and Germany. The aftermath of the sovereign bond crisis was characterized by a sequence of adverse permanent technology shocks both in Spain and in Italy. These latter results are consistent with recent theoretical developments that emphasize the adverse supply-side effects of a credit crunch.

Keywords: Asymmetric Euro Crisis, Two-Country DSGE, Bayesian Estimation

JEL Classification: C11, C13, C32, E21, E32, E37

Suggested Citation

Albonico, Alice and Cardani, Roberta and Tirelli, Patrizio, Debunking the Myth of Southern Profligacy. A DSGE Analysis of Business Cycles in the EMU's Big Four (November 3, 2017). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 373, Available at SSRN: https://ssrn.com/abstract=3065824 or http://dx.doi.org/10.2139/ssrn.3065824

Alice Albonico

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Università degli Studi di Milano-Bicocca - Center for European Studies (CefES)

U6 Building
Viale Piero e Alberto Pirelli, 22
Milano, 20126
Italy

Roberta Cardani

European Union - JRC-Ispra, European Commision ( email )

Via Enrico Fermi 2749, Ispra, VA
Ispra (VA), 21027
Italy

Patrizio Tirelli (Contact Author)

Department of Economics and Management ( email )

Corso Strada Nuova, 65
27100 Pavia, 27100
Italy

HOME PAGE: http://https://sites.google.com/site/patriziotirellihomepage/

Università degli Studi di Milano-Bicocca - Center for European Studies (CefES)

U6 Building
Viale Piero e Alberto Pirelli, 22
Milano, 20126
Italy

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
36
Abstract Views
476
PlumX Metrics