EconPapers    
Economics at your fingertips  
 

Monetary-Fiscal Interactions and the Euro Area's Malaise

Marek Jarociński and Bartosz Maćkowiak ()

No 12020, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: When monetary and fiscal policy are conducted as in the euro area, output, inflation, and government bond default premia are indeterminate according to a standard general equilibrium model with sticky prices extended to include defaultable public debt. With sunspots, the model mimics the recent euro area data. We specify an alternative configuration of monetary and fiscal policy, with a non-defaultable eurobond. If this policy arrangement had been in place since the onset of the Great Recession, output could have been much higher than in the data with inflation in line with the ECB's objective.

Keywords: fiscal theory of the price level; eurobond; self-ful lfiling expectations; zero lower bound (search for similar items in EconPapers)
JEL-codes: E31 E32 E63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-eec, nep-mac and nep-mon
Date: 2017-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12020 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Monetary-fiscal interactions and the euro area's malaise (2018) Downloads
Chapter: Monetary-Fiscal Interactions and the Euro Area’s Malaise (2017)
Working Paper: Monetary-fiscal interactions and the euro area's malaise (2017) Downloads
Working Paper: Monetary-Fiscal Interactions and the Euro Area's Malaise (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12020

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=12020

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2019-12-06
Handle: RePEc:cpr:ceprdp:12020