‘Whatever it takes’ and the role of Eurozone news |
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| Authors: | Minke Van Der Heijden Ward Romp |
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| Institution: | 1. Amsterdam School of Economics, University of Amsterdam, Amsterdam, The Netherlands;2. Amsterdam School of Economics, University of Amsterdam, and Netspar |
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| Abstract: | This letter shows that the ‘Whatever it takes’ speech by ECB President Draghi on 26 July 2012 and the ensuing installation of the Outright Monetary Transactions’ framework are associated with a reduction in the domestic and cross-border effect of Eurozone news on absolute yield changes in Eurozone sovereign debt. These results are consistent with the popular view that these actions helped to avoid a collapse of the Eurozone. |
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| Keywords: | Eurozone news break test crisis ‘Whatever it takes’ |
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