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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 1988, Working Paper Series from European Central Bank

Abstract: The euro area has been experiencing 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. JEL Classification: E31, E62, E63

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)
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-opm
Date: 2016-12
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Working Paper: Macroeconomic Stabilization, Monetary-Fiscal Interactions, and Europe's Monetary Union (2017) Downloads
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