This article derives time-varying threshold multipliers for G7 countries and the euro area, above which consolidation will be self-defeating (that is, leading to an increase rather than a decrease in the debt-to-GDP ratio). Simulations suggest that these thresholds have declined since the...

This paper analyzes the economic effects of content-based import tariffs China imposed on imported auto parts. While China's policy penalized any firm that assembled cars with less than 60% Chinese content, the policy was most likely to affect foreign-affiliated firms who were more likely to...

In terms of macroeconomic performance, the Eurozone’s first decade is a story of successful inflation-targeting by the ECB for the common currency area as a whole combined with the persistence of real exchange rate and current account disequilibria at member country level. According to the...

We apply a structural model of mothers’ labor supply and child care choices to evaluate the effects of two child care reforms in Germany that were introduced simultaneously. A legal claim to subsidized child care became effective for children aged 1 year or older. Moreover, a new child care...

Front-loaded fiscal austerity since the 2008 financial crisis has meant that the UK economic experience is being viewed as a kind of test case for the proposition that contractionary fiscal policy can induce an economic expansion. The discussion has often been implicitly framed in terms of the...

This article quantifies the welfare differences among a monetary union, flexible exchange rates (economic disintegration) and a monetary plus fiscal transfer union (higher economic integration). The vehicle of analysis is a medium-scale New Keynesian DSGE model consisting of two heterogeneous...

In a monetary union, the interaction between several governments and a single central bank is plagued by several sources of deficit bias, including common pool problems. Each government has strong preferences over local spending and taxation but suffers only part of the costs of union-wide...