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The interaction between a common monetary policy targeting inflation and decentralized fiscal policies aiming at output stability is considered in a setting taking into account interdependencies between countries running via trade links and the common monetary policy. The setting is sufficiently...
Persistent link: https://www.econbiz.de/10005666611
It is widely argued that Europe's unified monetary policy calls for international coordination at the fiscal level. We survey the issues involved with such coordination of fiscal policy as a demand management tool and we use a simple model to investigate the circumstances under which...
Persistent link: https://www.econbiz.de/10005123582
Central banks’ economic and political importance has grown in advanced economies since the start of the Great Financial Crisis in 2007. An unwillingness or inability of governments to use countercyclical fiscal policy has made monetary policy the only stabilization tool in town. However, much...
Persistent link: https://www.econbiz.de/10011084413
in Economic and Monetary Union (EMU), net general government borrowing may not exceed 3% of GDP and general government …
Persistent link: https://www.econbiz.de/10005123517
within EMU and the potential for instability in these economies entailed by EMU membership. …
Persistent link: https://www.econbiz.de/10005504528
rules, rather than paying attention also to fiscal policy. This is an omission because, especially with the advent of EMU …
Persistent link: https://www.econbiz.de/10005123984
In this Paper, we analyse the implications of price setting restrictions for the conduct of cyclical fiscal and monetary policy. We consider an environment with monopolistic competitive firms, a shopping time technology, prices set one period in advance, and government expenditures that must be...
Persistent link: https://www.econbiz.de/10005504488
How should monetary and fiscal policy react to adverse financial shocks? If monetary policy is constrained by the zero lower bound on the nominal interest rate, subsidising the interest rate on loans is the optimal policy. The subsidies can mimic movements in the interest rate and can therefore...
Persistent link: https://www.econbiz.de/10011083684
We develop a dynamic stochastic general equilibrium model to study bank risk and sovereign risk interdependence in the Euro Area. We find that an increase in capital investment risk shock, results in a considerably deeper recession when sovereign risk is also present. This result has three...
Persistent link: https://www.econbiz.de/10011201352
We consider standard cash-in-advance monetary models and show that there are interest rate or money supply rules such that equilibria are unique. The existence of these single instrument rules depends on whether the economy has an infinite horizon or an arbitrarily large but finite horizon.
Persistent link: https://www.econbiz.de/10005661665