Monetary-fiscal interactions and the euro area’s vulnerability

Marek Jarociński and Bartosz Maćkowiak

Research Bulletin, 2017, vol. 36

Abstract: When monetary and fiscal policy are conducted as in the euro area, self-fulfilling expectations of economic agents can lead to undesirable fluctuations in output, inflation and government bond spreads. An alternative policy arrangement would enable more effective macroeconomic stabilisation. JEL Classification: E31, E32, E63

Keywords: eurobond; self-fulfilling expectations; sovereign default risk; zero lower bound (search for similar items in EconPapers)
Date: 2017-06
Note: 400529
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