A database: How the euro crisis ended: Not with a (fiscal) bang but a whimper

Abstract

A reform of the fiscal framework in the European Union is currently under discussion. The way ahead is yet unclear. In revisiting the importance of monetary and fiscal policy coordination to reduce uncertainty during the Eurozone Crisis, we add to this discussion a database that comprises daily official data on every policy action from 2007 to 2016 taken by the European Central Bank, the European Commission, and other governmental actors as a free download. Then, we investigate the effect of fiscal policy in an event-study analysis. We find that most measures designed to strengthen the existing Maastricht 1.0 framework of the European Monetary Union (e.g., fiscal compact) are not correlated with yield spreads reduction and do not have any causal effect on uncertainty. Events signaling out financial stability and financial assistance among European Monetary Union member states are likely to have that effect in comparison. After Germany's Bundestag ratified the European Stability Mechanism and when the Federal Constitutional Court approved its legitimacy, yield spreads of Greece, Ireland, Italy, Portugal and Spain significantly decreased.