Since the Global Financial Crisis in 2008-2009, there has been flourishing literature on the role of fiscal policy in stimulating demand when the economy is in a deep recession. Past studies suggest the stimulus may make sense if it is temporary, targeted, and withdrawn quickly. However, since...

The unprecedented fiscal package adopted by the European Council in the summer of 2020 ―dubbed Next Generation EU―is vital for the recovery of the euro area from the pandemic shock. However, there are risks that targets will not be met and that it may prove difficult to muster the same...

The paper shows that the introduction a Eurobond together with fiscal capacity at the centre would produce macro-stabilisation benefits both for the ‘core' and ‘periphery' of the Eurozone and would also achieve a rebalancing of the policy mix away from monetary towards fiscal stimulus. To...