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Designing the Policy Mix in a Monetary Union

Kempf, Hubert - 2020

This paper studies the design of the policy mix in a monetary union, that is, the institutional arrangement specifying the relationships between the various policymakers present in the union and the extent of their capacity of action. It is assumed that policymakers do not cooperate. Detailing...

Persistent link: https://www.econbiz.de/10012832189

Redistribution and the Monetary-Fiscal Policy Mix

Bhattarai, Saroj; Lee, Jae Won; Yang, Choongryul - 2021

We show that the effectiveness of redistribution policy in stimulating the economy and improving welfare is directly tied to how much inflation it generates, which in turn hinges on monetary-fiscal adjustments that ultimately finance the transfers. We compare two distinct types of monetaryfiscal...

Persistent link: https://www.econbiz.de/10013314763

The Liquidity Channel of Fiscal Policy

Bayer, Christian - 2020

—the liquidity premium. We rationalize this finding in an estimated heterogeneous-agent New-Keynesian (HANK) model with incomplete … markets and portfolio choice, in which public debt affects private liquidity. In this environment, the short-run fiscal … multiplier is amplified by the countercyclical liquidity premium. This liquidity channel stabilizes investment and crowds in …

Persistent link: https://www.econbiz.de/10012830353

The Euro Area Periphery Sovereigns' Fiscal Positions and Unconventional Monetary Policy

Hülsewig, Oliver - 2020

We explore the reaction of the euro area periphery sovereigns' fiscal positions to an unconventional monetary policy shock. We estimate panel vector autoregressive (VAR) models over the period 2010-2018, and identify the shock by imposing sign restrictions. Our results suggest that the...

Persistent link: https://www.econbiz.de/10012843420

The Impact of Containment Measures and Monetary and Fiscal Responses on US Financial Markets During the COVID-19 Pandemic

Aikins Abakah, Emmanuel Joel; Caporale, Guglielmo Maria; … - 2021

This paper analyses the effects of containment measures and monetary and fiscal responses on US financial markets during the Covid-19 pandemic. More specifically, it applies fractional integration methods to analyse their impact on the daily S&P500, the US Treasury Bond Index (USTB), the S&P...

Persistent link: https://www.econbiz.de/10013220137

Fiscal Rules : Historical, Modern, and Sub-National Growth Effects

Gründler, Klaus - 2020

We examine how fiscal rules influence economic growth. The results show that constitutional fiscal rules promoted growth from the Industrial Revolution until World War II (1789-1950) and also increased modern economic growth (1985-2015). To address selection on unobservables, we conduct a...

Persistent link: https://www.econbiz.de/10012833605

Consistent Flexibility : Enforcement of Fiscal Rules Through Political Incentives

Dotti, Valerio - 2020

We study a fiscal policy model in which the government is present-biased, leading to an excessive public deficit. An optimally designed fiscal rule needs to trade off the benefit of committing the government to not overspend against the benefit of granting it flexibility to react to shocks to...

Persistent link: https://www.econbiz.de/10012827666

Do EU Fiscal Rules Support or Hinder Counter-Cyclical Fiscal Policy?

Larch, Martin; Orseau, Eloise; der Wielen, Wouter van - 2021

Rather than stabilising aggregate demand, discretionary fiscal policy tends to amplify cyclical fluctuations of output. The commonly accepted reasons are political economy and uncertainty. In the EU, the pro-cyclical nature of discretionary fiscal policy has also been associated with the...

Persistent link: https://www.econbiz.de/10013315041

Term Limits : Do They Really Affect Fiscal Policy Choices?

Dalle Nogare, Chiara; Ricciuti, Roberto - 2021

According to reputational models of political economy, a term limit may change the behavior of a chief executive because he does not have to stand for election. We test this hypothesis in a sample of 52 countries over the period 1977-2000, using government spending, social and welfare spending...

Persistent link: https://www.econbiz.de/10013316609

Partisan Fiscal Policy : Evidence from Central and Eastern Europe

Schneider, Ondrej - 2020

This paper examines effects of political ideology of a governing party on fiscal outcomes, using data from eight Central and Eastern European countries in the 2001-2017 period. The analysis shows that there is a statistically significant effect of conservative governments on fiscal variables,...

Persistent link: https://www.econbiz.de/10012844215