Paradigm Shift after the Inflation Shock?

Jerome Creel, François Geerolf (), Sandrine Levasseur, Xavier Ragot () and Francesco Saraceno ()
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François Geerolf: OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, CEPR - Center for Economic Policy Research
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, 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: Coordination; Tinbergen; Inflation; Monetary policy; Fiscal policy (search for similar items in EconPapers)
Date: 2025-12-11
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Published in Etienne Farvaque; Piotr Stanek. Are Central Banks Still Conservative?, Edward Elgar Publishing, pp.250-267, 2025, 9781035337569. ⟨10.4337/9781035337576.fm2⟩

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Working Paper: Paradigm Shift after the Inflation Shock? (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05479432

DOI: 10.4337/9781035337576.fm2

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