I have been awarded a European Commission FP7 grant for a collaborative project entitled: Macro Risk Assessment and Stabilization Policies with New Early Warning Signals (RASTANEWS). The project focuses on research about the future of macro-economic and monetary integration in Europe. Professor Karanasos’ contribution is aimed at the application of time series analysis for modelling financial and macroeconomic (in)stability.


RASTANEWS intends to enhance knowledge base, at both theoretical and an applied level, on many aspects of the future of macro-economic and monetary integration in Europe thus paving the way to a revised governance of the EMU, and the EU as a whole, in the wake of the debt crisis. To facilitate the timely identification of macro risks, the project proposes a new system of early warning indicators, to be implemented within the EMU surveillance mechanism. This proposal is consistent with our theoretical framework and is based on an empirical macro-finance approach.


Twelve European universities worked together on this project. RASTANEWS received the highest rating out of more than 100 grant applications. The grant was € 2.4M in total, with approximately €88K coming to Brunel.


For the webpage of the RASTANEWS click the link: RASTANEWS


The RAstaNEWS Consortium brought together 12 European universities and think tanks.
They are:
Università degli Studi di Milano – Bicocca (Project Coordinator)
Istituto per gli Studi di Politica Internazionale (researc unit: European Programme)
Fondation National des Sciences Politiques (research unit: OFCE)
Universiteit van Amsterdam (research unit: CENDEF)
Università Politecnica delle Marche
Università Cattolica del Sacro Cuore
Katholieke Universiteit Leuven
Polski Instytut Spraw Międzynarowych
University of Pécs
Brunel University London
Ruprechts-Karls-Universität Heidelberg (research unit: Alfred-Weber-Institute)
Queen Mary and Westfield College, University of London

One representative for each partner participated to the Consortium’s Steering Committee (SC) meetings.


Steering Committee

One representative for each partner participated to the Consortium’s Steering Committee (SC) meetings. The SC, which was chaired by the Project Coordinator, was the ultimate decision-making body of the Consortium, and was also the supervisory body for the execution of the RAstaNEWS project.

More in detail, the SC:

monitors the effective and efficient implementation of the project;
allocates resources in order to meet the scheduled goals;
ensures that Intellectual Property is protected;
identifies and resolve problems and conflicts;
ensures the communication between the Consortium and the EU Commission;
steers the publication strategy of the Consortium regarding common outputs.

Following is the list of members of the RAstaNEWS Steering Committee:

Christian Conrad (Ruprechts-Karls-Universität Heidelberg)
Domenico Delli Gatti (Università Cattolica del Sacro Cuore)
Mauro Gallegati (Università Politecnica delle Marche)
Zoltán Gál (University of Pécs)
Cars Hommes (Universiteit van Amsterdam)
Menelaos Karanasos (Brunel University London)
Claudio Morana (Università di Milano Bicocca)
Pablo Rovira-Kaltwasser (Katholieke Universiteit Leuven)
Francesco Saraceno (Fondation National des Sciences Politiques)
Patrizio Tirelli (Università degli Studi di Milano – Bicocca)
Pawel Tokarski (Polski Instytut Spraw Miedzynarodowych)
Antonio Villafranca (Istituto per gli Studi di Politica Internazionale)


2nd RAstaNEWS Conference (March 13th, 2015):


On March 13th, 2015, ISPI hosted the Second RAstaNEWS Conference.
The Conference “Eurozone in the Doldrums: Escaping the Fate of Recurring Crises” (watch below the first and second part) was opened by Patrizio Tirelli (University of Milan-Bicocca), coordinator of the RAstaNEWS consortium, and chaired by Ferdinando Giugliano (Financial Times).
Distinguished speakers included:
– Pier Carlo Padoan, Italian Minister of Economy and Finances;
-Marco Buti, Director-General, DG ECFIN, European Commission;
-Paul De Grauwe, Professor, London School of Economics;
-Ester Faia, Professor, Goethe University Frankfurt;
-Michael Spence, Nobel Laureate in Economic Sciences.



Concept of the Conference: The never-ending Greek crisis and modest economic prospects highlight the ongoing fragility of the Eurozone despite the austerity efforts of the last years. In this context, can the recent measures presented by Mr. Juncker and the ECB boost growth? Is a quantum leap towards expansionary economic policies –both in Brussels and member states – a viable option? To what extent does the recent Greek elections signal a growing euroscepticism across the EU?

Before the Conference:

– Minister Padoan said that he was optimistic about the recent measures adopted by the ECB and President Juncker:


– Patrizio Tirelli sided in favor of expansive macroeconomic policies, but stressed that more is needed on the fiscal side of the policy spectrum:



– Paul De Grauwe called for a political Europe, stating that only a federal, united Europe can credibly support the economic recovery and undertake those solidarity measures that are much needed today:



– Marco Buti underlined the positive work done by the European Commission in order to give enough policy space on the fiscal side to stressed countries, and praised the Commission’s work on new investment initiatives such as the European Infrastructure Investment Plan:



– Michael Spence praised the newfound European unity that allowed the European Commission to sketch out its own strategy, but stressed that this new course should mark a strategic shift in favour of fostering investment:



1st RAstaNEWS Conference:


On January 14th, ISPI hosted the First RAstaNEWS Conference.

“More Europe: Letting the Euro Work at Full Speed” (watch the video of the Conference) was attended, among other distinguished speakers, by the Italian Minister of Economy and Finances, Fabrizio Saccomanni, and by the Vice President of the European Central Bank, Vítor Constâncio. Chair of the Conference was Tony Barber, Europe editor at the Financial Times. The full list of speakers at the Conference can be found here.

Main topic of the Conference was the acknowledgment of the fragility of the common currency construction – finally exposed during the European debt crisis -, both from an economic and a political point of view. The speakers at the Conference discussed the state of the European recovery, and the political steps that have been taken in order to address the original drawbacks of the institutional framework of the common currency (e.g., the ESM, the permanent bailout fund; the SSM and SRM, different elements of the nascent banking union) and new proposals to let the euro achieve its full potential (e.g., elements of a fiscal capacity for the EU).

Before the Conference:

Vítor Constâncio talk about the main measures adopted by the ECB in the face of the crisis;
Rolf Strauch, responsible for Economics and Policy Strategy at the ESM, listed factors that let Spain succesfully exit its financial assistance programme;
Lucio Pench, Director of Fiscal Policy at the DG ECFIN, told us about the EU Commission role to cope with austerity measures and macroeconomic divergence.

First RAstaNEWS Report (20-06-2015)

RAstaNEWS  issued its first Annual Report!

The report takes off from the assumption that rethinking the future of macroeconomic and monetary integration in Europe requires a substantial revision and integration of underlying macroeconomic models, and a new vision about what markets and policymakers can accomplish. In a nutshell, since its inception RAstaNEWS has aimed at providing two different but interrelated policy outputs to EU and Eurozone policymakers:

1) a proposal to reform EMU policies in a way that would contribute to decrease the likelihood of the occurrence of future crises, while at the same time supporting overall growth in the currency union;
2) a proposal to pinpoint or devise new early warning signals (EWS), in order to spot problematic disequilibria at the macro level, with the aim to act as early as possible to rebalance national economies or the Eurozone as a whole before a full-fledged crisis ensues.

In this Annual report, we focused on the former proposal. A second Annual report was then aimed at contributing to the EWS literature.


Related work/publications:


“Modelling Returns and Volatilities During Financial Crises: a Time Varying Coefficient Approach”

(Journal of Empirical Finance, 2014)

Multivariate FIAPARCH modelling of financial markets with dynamic correlations in times of crisis

(International Review of Financial Analysis, 2016)

“Inflation convergence in the EMU and the link between inflation differentials and their uncertainty”

(Journal of Empirical Finance, 2016)

“The fundamental properties of time varying AR models with non stochastic coefficients”

(working paper)

“The Greek Dra(ch)ma: 5 Years of Austerity. The Three Economists’ View and a Comment.”, 2016

and C. Tsoukis (with J. Hatgioannides, M. Karanassou, P. Koutroumpis and H. Sala)