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The failure of ECB monetary policy from a Mises-Hayek perspective

Schnabl, Gunther - 2017

The paper analyses the common European monetary policy based on a Mises-Hayek overinvestment framework, which is combined with the theory of optimum currency areas. It shows how since the turn of the millennium a too expansionary monetary policy contributed to unsustainable overinvestment booms...

Persistent link: https://www.econbiz.de/10011619626

Can central banks do the unpleasant job that governments should do?

Dimakopoulou, Vasiliki; Oikonomidēs, Geōrgios; … - 2023

We investigate what happens when the fiscal authorities do not react to rising public debt so that the unpleasant task of fiscal sustainability falls upon the Central Bank (CB). In particular, we explore whether the CB's bond purchases in the secondary market can restore stability and...

Persistent link: https://www.econbiz.de/10014331713

Fiscal transfers in a monetary union with exit option

Hefeker, Carsten; Neugart, Michael - 2015

It is widely debated whether a monetary union has to be accompanied by a fiscal transfer scheme to accommodate asymmetric shocks. We build a model of a monetary union with a central bank and two heterogeneous countries that are linked by a fiscal transfer scheme with repercussions on monetary...

Persistent link: https://www.econbiz.de/10010492336

Inflation targeting by debtor central banks in emerging market economies

Löffler, Axel; Schnabl, Gunther; Schobert, Franziska - 2010

to accumulate massive foreign reserves. If left unsterilized, the liquidity expansion can threaten domestic macroeconomic … stability. To contain domestic inflation these central banks absorb rather then provide liquidity in their regular monetary … surplus liquidity is less efficient, because absorbing liquidity raises the costs of monetary policy operations. By …

Persistent link: https://www.econbiz.de/10003994520

Limits of monetary policy autonomy by East Asian debtor central banks

Löffler, Axel; Schnabl, Gunther; Schobert, Franziska - 2012

thereby increase surplus liquidity. East Asian central banks with more flexible exchange rate regimes also face surplus … liquidity that mainly emanates from past accumulation of foreign reserves. We show based on an augmented Barro …-Gordon-type central bank loss function that in both cases surplus liquidity limits monetary policy autonomy. In case of fixed exchange …

Persistent link: https://www.econbiz.de/10009500749

Optimal fiscal action in an economy with sovereign Premia and without monetary independence : an application to Italy

Philippopulos, Apostolēs; Varthalitis, Petros; … - 2013

We welfare rank various tax-spending policies. The setup is a New Keynesian model of a semi-small open economy featuring sovereign risk premia and loss of monetary policy independence. The model is calibrated to match data from the Italian economy 2001-2011. We compute various optimized...

Persistent link: https://www.econbiz.de/10009731213

Fiscal consolidation and its cross-country effects

Philippopulos, Apostolēs; Varthalitis, Petros; … - 2016

We build a new Keynesian DSGE model consisting of two heterogeneous countries participating in a monetary union. We study how public debt consolidation in a country with high debt (like Italy) affects welfare in a country with solid public finances (like Germany). Our results show that debt...

Persistent link: https://www.econbiz.de/10011515282

Uncertainty and fiscal policy in an asymmetric monetary union

Hefeker, Carsten (contributor); Zimmer, Blandine (contributor) - 2008

The paper examines the monetary-fiscal interactions in a monetary union model with uncertainty due to imperfect central bank transparency. We first show that monetary uncertainty disciplines fiscal policymakers and thereby reduces taxes, average inflation and output distortions. However, as more...

Persistent link: https://www.econbiz.de/10003749682

Rent-seeking competition from state coffers : a calibrated DSGE model of the euro area

Angelopoulos, Konstantinos (contributor); … - 2006

This paper incorporates an uncoordinated struggle for extra fiscal favors into an otherwise standard Dynamic Stochastic General Equilibrium model. This reflects the popular belief that interest groups compete for privileged transfers and tax treatment at the expense of the general public...

Persistent link: https://www.econbiz.de/10003300952

Optimal central bank conservatism and monopoly trade unions

Berger, Helge; Hefeker, Carsten; Schöb, Ronnie - 2001

OPTIMThe conservative central banker has come under attack recently. Explicitly modeling the interaction of a trade union with monetary policy, it has been argued that the standard solution to the inflationary bias in monetary policy might actually be welfare reducing if the trade union has an...

Persistent link: https://www.econbiz.de/10011397779