On the impact of the global financial crisis on the euro area
This paper analyses the impact of the Global Financial Crisis on the Euro area utilizing a simple dynamic macroeconomic model with interaction between monetary policy and fiscal policy. The model consists of an IS curve, a Phillips curve, a term structure relation, a debt accumulation equation and a Taylor monetary policy rule supplemented with a Zero Lower Bound, and a fiscal policy rule. The model is alibrated/estimated for EU-16 countries for the period 1980Q1-2009Q4. The impact of the Global Financial Crisis is studied by means of impulse responses following a combined, prolonged aggregate demand and public debt shock. The simulation mimicking the GFC turns out to work fairly well. However, the required size of the shock is quite large.
Year of publication: |
2013
|
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Authors: | He, Xiaoli ; Jacobs, Jan ; Kuper, Gerard ; Ligthart, Jenny |
Institutions: | Faculteit Economie en Bedrijfskunde, Rijksuniversiteit Groningen |
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