Policy spillovers and synergies in a monetary union
We provide a general equilibrium framework for analyzing the effects of supply and demand side policies, and the potential synergies between them, in an asymmetric monetary union that faces a liquidity trap and a slow deleveraging process in its ‘periphery‘. We find that the joint implementation of pro-competition structural reforms in the periphery, a fiscal expansion in the core, and forward guidance about the future path of nominal interest rates produces positive synergies between the three policies: forward guidance re-inforces the expansionary effects of country-specific policies, and the latter in turn improve the effectiveness of forward guidance. Our results provide a case for complementing current unconventional monetary stimuli in the euro area with national efforts on the structural reform and fiscal fronts.
Year of publication: |
2016
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Authors: | Arce, Óscar ; Hurtado, Samuel ; Thomas, Carlos |
Publisher: |
Frankfurt a. M. : European Central Bank (ECB) |
Subject: | deleveraging | monetary union | structural reforms | synergies | zero lower bound |
Saved in:
freely available
Series: | ECB Working Paper ; 1942 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
ISBN: | 978-92-899-2190-9 |
Other identifiers: | 10.2866/26487 [DOI] 882017756 [GVK] hdl:10419/154375 [Handle] RePEc:ecb:ecbwps:20161942 [RePEc] |
Classification: | E44 - Financial Markets and the Macroeconomy ; E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization ; D42 - Monopoly |
Source: |
Persistent link: https://www.econbiz.de/10011605987
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