In this paper we suggest that Eurozone countries face a policy trade-off among: 1) a common rule imposing co-movements in fiscal policy; 2) financial stability; and 3) financial integration. We provide empirical evidence documenting the existence of such a trade-off in the period characterized...

In this paper we suggest that Eurozone countries face a policy trade-off among: 1) a common rule imposing co-movements in fiscal policy; 2) financial stability; and 3) financial integration. We provide empirical evidence documenting the existence of such a trade-off in the period characterized...

'Leaning against the wind' (LAW) with a higher monetary policy interest rate may have benefits in terms of lower real debt growth and associated lower probability of a financial crisis but has costs in terms of higher unemployment and lower inflation, importantly including a higher cost of a...

Standard models of policy credibility, defined as the expectation that an announced policy will be carried out, emphasize the preferences of the policymaker, and the role of tough policies in signalling toughness and raising credibility. Whether a policy is carried out, however, will also...

In this paper we address the issue of how transmission uncertainty could affect the choice between a federal monetary policy based on national data and one on aggregated data. We find that the uncertainty about the transmission process increases the need to take into account information about...

This paper discusses how price stability can be defined and how price stability can be maintained in practice. Some lessons for the Eurosystem are also considered. With regard to defining price stability, the choice between price-level stability and low (including zero) inflation and the...

In this paper we address the issue of how transmission uncertainty could affect the choice between a federal monetary policy based on national data and one on aggregated data.We find that the uncertainty about the transmission process increases the need to take into account information about...

This paper discusses how price stability can be defined and how price stability can be maintained in practice. Some lessons for the Eurosystem are also considered. With regard to defining price stability, the choice between price-level stability and low (including zero) inflation and the...

The ECB has announced that when government and corporate bonds come to maturity in the context of its QE-program, new bonds will be bought in the market so as to keep the money stock (money base) unchanged. This creates a "window of opportunities" for the ECB. It could replace the old bonds with...