Paradigm shift after the inflation shock?

Jérôme Creel (), François Geerolf (), Sandrine Levasseur (), Xavier Ragot () and Francesco Saraceno ()
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Jérôme Creel: OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po
François Geerolf: OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po
Sandrine Levasseur: OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique
Xavier Ragot: OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique
Francesco Saraceno: OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, LEAP - Luiss Institute for European Analysis and Policy

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Abstract: During the recent inflation episode, the paradigm of separate objectives for monetary and fiscal policies has shown some limits. Fiscal policies have helped mitigate inflation. We advocate for the emergence of a new paradigm that gives equal consideration to fiscal and monetary policies and their interactions. These interactions and their respective spillover effects require better political coordination and a good dose of pragmatism, in contrast with the binding rules embedded in the separation paradigm so present in the European governance framework. The latter should give more leeway to supply-driven fiscal policies and learn from the US experience.

Keywords: Fiscal policy; Monetary policy; Inflation; Tinbergen; Coordination (search for similar items in EconPapers)
Date: 2025-12-11
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Published in Are Central Banks Still Conservative?, Edward Elgar Publishing, pp.250-267, 2025, ⟨10.4337/9781035337576.00021⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05479432

DOI: 10.4337/9781035337576.00021

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