This paper studies household financial choices in four euro area countries. The goal of the analysis is to understand the sources of the differences in these choices and their implications for the impact of monetary policy on consumption. The estimation of key parameters uses a simulated method...

This paper studies fiscal spillovers in a monetary union. The focus of the analysis is on the interaction between the fiscal policy of member countries (regions) and the central monetary authority. When capital markets are integrated, the fiscal policy of one country will influence equilibrium...

This paper studies the interaction of government debt and financial markets. Both markets are fragile: excessively responsive to fundamentals and prone to strategic uncertainty. This interaction, termed a 'diabolic loop', is driven by government choice to bail out banks and the resulting...