Local and global shocks' transmission in the eurozone during the crisis period

The financial crises consequences during the last years spread out over the banking market of the whole Europe. Political discussions focus on the often indebted economies, especially on Portugal, Italy, Greece and Spain. However, the financial and trade transactions are related. Consequently, the instability affects nominal and real sector in the whole Eurozone as well. With respect to the common monetary policy that is conducted by the ECB, the authors focus on the local and global shocks differentiation.

Mahanobilis distance and panel data analysis approach were applied in the empirical part of the paper. The authors distinguish different groups of countries according to the adjustment mechanism to financial shocks. The capitalisation of the commercial banks and surplus of liquid resources are the main sources of the heterogeneity in different sensitivity to shocks.

The aim of this paper is to identify local and global macroeconomic shocks at the open market-based framework and creating recommendations for economic policy makers concerning the questions of implementing autonomous and common policies inside monetary union.