Macroeconomic stabilization, monetary-fiscal interactions, and Europe’s monetary union
Giancarlo Corsetti (),
Luca Dedola (),
Bartosz Maćkowiak () and
Sebastian Schmidt ()
No 1988, Working Paper Series from European Central Bank
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)
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Working Paper: Macroeconomic Stabilization, Monetary-Fiscal Interactions, and Europe's Monetary Union (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20161988
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