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Macroeconomic Stabilization, Monetary-Fiscal Interactions, and Europe's Monetary Union

Giancarlo Corsetti (), Luca Dedola, Marek Jarociński, Bartosz Maćkowiak () and Sebastian Schmidt ()

No 12371, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The euro area recently experienced a prolonged period of weak economic activity and very low inflation. This paper reviews models of business cycle stabilization with an eye to formulating lessons for policy in the euro area. According to standard models, after a large recessionary shock accommodative monetary and fiscal policy together may be necessary to stabilize economic activity and inflation. The paper describes practical ways for the euro area to be able to implement an effective monetary-fiscal policy mix.

Keywords: eurobond; Government bonds; Joint Analysis of Fiscal and Monetary Policy; Lower Bound on Nominal Interest Rates; Self-Fulfilling Sovereign Default (search for similar items in EconPapers)
JEL-codes: E31 E62 E63 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac, nep-mon and nep-opm
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Related works:
Journal Article: Macroeconomic stabilization, monetary-fiscal interactions, and Europe's monetary union (2019) Downloads
Working Paper: Macroeconomic Stabilization, Monetary-fiscal Interactions, and Europe’s monetary Union (2016) Downloads
Working Paper: Macroeconomic stabilization, monetary-fiscal interactions, and Europe’s monetary union (2016) Downloads
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