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On prosperity and posterity: the need for fiscal discipline in a monetary union

Detken, Carsten; Gaspar, Vítor; Winkler, Bernhard - European Central Bank - 2004

We show how in a Blanchard-Yaari, overlapping generations framework, perfect substitutability of government bonds in Monetary Union tempts governments to exploit the enlarged common pool of savings. In Nash equilibrium all governments increase their bond financed transfers to current generations...

Persistent link: https://www.econbiz.de/10005162931

Fiscal sustainability and public debt in an endogenous growth model

Fernández-Huertas Moraga, Jesús; Vidal, Jean-Pierre - European Central Bank - 2004

This paper investigates fiscal sustainability in an overlapping generations economy with endogenous growth coming from human capital formation through educational spending. We assess how budgetary imbalances affect economic dynamics and the outlook for economic growth, thereby providing a...

Persistent link: https://www.econbiz.de/10005530746

Population ageing and public pension reforms in a small open economy

Nickel, Christiane; Rother, Philipp; Theophilopoulou, … - European Central Bank - 2008

This paper aims to address the issue of public pension reforms under demographic ageing that is likely to occur in Europe over the next 50 years. Three possible scenarios are analysed in a Blanchard OLG framework. These include: i) a decrease both in public pensions and the lump sum labour...

Persistent link: https://www.econbiz.de/10005530838

Debt stabilizing fiscal rules

Michel, Philippe; von Thadden, Leopold; Vidal, Jean-Pierre - European Central Bank - 2006

Unstable government debt dynamics can typically be corrected by various fiscal instruments, like appropriate adjustments in government spending, public transfers, or taxes. This paper investigates properties of state-contingent debt targeting rules which link stabilizing budgetary adjustments...

Persistent link: https://www.econbiz.de/10005816209

National prices and wage setting in a currency union

Sánchez, Marcelo - European Central Bank - 2009

Existing work on wage bargaining (as exemplified by Cukierman and Lippi, 2001) typicallypredicts more aggressive wage setting under monetary union. This insight has not beenconfirmed by the EMU experience, which has been characterised by wage moderation,thereby eliciting criticism from Posen and...

Persistent link: https://www.econbiz.de/10005866574

Macroeconomic adjustment to monetary union

Fagan, Gabriel; Gaspar, Vítor - European Central Bank - 2008

The move to monetary union in Europe led to convergence of interest rates among the participating countries. This was associated with notable cross-country differences in the behaviour of key macroeconomic aggregates. Compared to the low interest rate countries, former high interest rate...

Persistent link: https://www.econbiz.de/10005530848

Adjusting to the euro

Fagan, Gabriel; Gaspar, Vítor - European Central Bank - 2007

In this paper we argue that, for a group of converging economies of the European Union, participation in the euro area has been associated with easier access to financing by domestic economic agents. Easier access to financing was a significant impulse leading to a sharp increase in households'...

Persistent link: https://www.econbiz.de/10005816293

Labor market institutions and the business cycle Unemployment rigidities vs. real wage rigidities

Abbritti, Mirko; Weber, Sebastian - European Central Bank - 2010

This paper investigates the importance of labor market institutions for inflation and unemployment dynamics. Using the … Unemployment Rigidities (UR) and those that cause Real Wage Rigidities (RWR). The two types of institutions have opposite effects … and their interaction is crucial for the dynamics of inflation and unemployment. We estimate a panel VAR with …

Persistent link: https://www.econbiz.de/10008476128

National prices and wage setting in a currency union

Sánchez, Marcelo - European Central Bank - 2009

Existing work on wage bargaining (as exemplified by Cukierman and Lippi, 2001) typically predicts more aggressive wage setting under monetary union. This insight has not been confirmed by the EMU experience, which has been characterised by wage moderation, thereby eliciting criticism from Posen...

Persistent link: https://www.econbiz.de/10005002814

The real effects of money growth in dynamic general equilibrium

Graham, Liam; Snower, Dennis J. - European Central Bank - 2004

We analyse the effects of money growth within a standard New Keynesian framework and show that the interaction between staggered nominal contracts and money growth leads to a long-run trade-off between output and money growth. We explore the microeconomic mechanisms that lead to this trade-off,...

Persistent link: https://www.econbiz.de/10005162920

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