Abstract:
The project will theoretically and empirically investigate the effects that systemic, mostly supranational financial shocks and
policy responses (local and global) to these shocks have on behavior, economic performance and welfare of the private sector in
open economies. We want to contribute to answering the following questions:
(a) What type of economic integration, i.e. through trade, corporate production chains or financial markets, is more likely
to support systemic risk propagation as opposed to their containment?
(b) What kinds of supranational policies are least prone to engendering new systemic disturbances while counteracting
existing ones?
The analysis will be conducted with a particular regard to structural and institutional specifics of Europe. Namely, we will be
studying interacting small-to-medium size open economies in which overarching institutions often mimic those of a textbook
big closed economy but lack the corresponding implementation authority.