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The aim of this study is to determine whether financial contagion is transmitted through macroeconomic fundamentals, not only in weaker countries but also in strong European Monetary Union (EMU) economies.

This study conducts, for the first time, an analysis of the spillover effects resulting from a shock to Italian sovereign risk on the banking systems and credit default swaps (CDS) of five EMU core countries during the period 2012–2018, employing a global vector autoregressive (GVAR) approach. Spatial interdependence is quantified through the cross-country distance in the deficit-to-gross domestic product (GDP) ratio.

The findings reveal the existence of both a “doom-loop” between banks and sovereign bonds and a “bad neighbours” effect. The susceptibility to spillovers is notably higher in economies displaying a larger deficit-to-GDP ratio. These results suggest that differences in fiscal fundamentals could drive financial contagion even within core countries, indicating a need for evaluating the stability of the entire EMU system.

Unlike previous studies, we utilize the cross-country distance in the deficit-to-GDP ratio as a measure of fiscal fundamentals distance for the countries under investigation. To the best of our knowledge, our study is the first to analyse this matter in EMU core countries using a GVAR methodology.

This chapter focuses on the impact of national economic conditions and voters’ attitudes on the positioning of European national political parties with regard to the European Union (EU). We provide an empirical analysis based on data gathered through the Chapel Hill Expert Survey (CHES) covering parties from 14 European countries observed over the 1999–2010 time span. We perform a regression analysis where the dependent variable measures the position of political parties vis-à-vis EU integration and explanatory variables include a number of measures of national economic conditions, features of the national political and institutional framework and voters’ Euroscepticism. Fixed effect, ordered logit and fractional logit estimates provide the following main results. Compared with other parties, non-mainstream political parties and those acting in established economies are more prone to mirror citizens’ Eurosceptic sentiments. National economic conditions such as inflation as well as gross domestic product (GDP) growth affect mainstream party support for the EU. Smaller and ideologically extreme parties are, on average, less supportive of European integration.