This paper explores the effects of discretionary fiscal policy in a DSGE model that explicitly models housing investment and allows for credit constrained households along the lines of the financial accelerator literature.The presence of credit constrained households raises the marginal...

Some researchers have recently introduced productive government investment spending into Dynamic stochastic general equilibrium (DSGE) models, adding a supply channel. This paper takes a similar perspective but it also introduces the government consumption good into the household utility...

Economic research paper on EMU and open economy macroeconomics The paper uses a 3-region version (small open economy in EMU, other euro area, rest of the world) of QUEST to assess the impact of structural reforms on external positions along two dimensions, namely the impact of flexibility and...

The paper uses the European Commission's QUEST III model to compare the impact of product market reform, labour market re-form and fiscal devaluation on economic activity and external accounts in infinite-horizon and finite-horizon versions of the model for a small open economy in monetary union...

Summary for non-specialistsThis paper uses a multi-region dynamic general equilibrium model with collateral constrained households and residential investment to examine the effectiveness of fiscal policy. The presence of credit constrained households makes fiscal policy a more powerful tool for...

Ten years on from its launch, it is clear that EMU, which has to be regarded as a more profound regime change than is often acknowledged, has had a pronounced effect on economic governance. As a framework for the conduct of macroeconomic policy, EMU has had undoubted successes in assuring price...

This paper examines the benefits of co-ordination in EMU in a stylised manner and how these benefits have shaped the co-ordination framework in EMU. It then discusses in detail the co-ordination experience in four areas that are particularly important for the functioning of EMU: (i) fiscal...

This paper studies the effectiveness of Euro Area (EA) fiscal policy, during the recent financial crisis, using an estimated New Keynesian model with a bank. A key dimension of policy in the crisis was massive government support for banks—that dimension has so far received little attention in...

The paper analyses the stabilising potential of simple fiscal policy rules for a small open economy in monetary union in a 2-region DSGE model with nominal and real rigidities. We consider simple fiscal instrument rules for government purchases, transfers, and consumption, labour and capital...