We extend the model of Leith and Wren-Lewis (2000) to the case of a two-country monetary union, incorporating adaptive expectations. An asymmetry between the stabilisation properties of the two fiscal policies is introduced: only one country is fiscally-constrained by the dispositions of the...

During the crisis, the ECB modified its collateral framework to face increased liquidity needs of commercial banks. This has taken two forms: the minimum required rating for different classes of assets has been reduced and the haircut associated to these assets has evolved conditional on the...

During the crisis, the ECB modified its collateral framework to face increased liquidity needs of commercial banks. This has taken two forms: the minimum required rating for different classes of assets has been reduced and the haircut associated to these assets has evolved conditional on the...

We review the set of arguments in favour of adding permanently balance sheet policies to the central bank toolkit. Balance sheet policies could support financial stability and complement the role of the standard - pre-crisis - policy to enhance macroeconomic stability. There are two major...