The euro area, like many other advanced economies, has entered an era of drastic demographic change. Without appropriate policy responses, population ageing in the euro area is posing formidable challenges for potential growth, monetary policy and public finances. This paper examines - from a...

The euro area, like many other advanced economies, has entered an era of drastic demographic change. Without appropriate policy responses, population ageing in the euro area is posing formidable challenges for potential growth, monetary policy and public finances. This paper examines – from a...

Why are we seeing inflation? The government dropped about $5 trillion in people's bank accounts, a classic fiscal helicopter drop. Why did this one produce inflation? People do not believe this debt will be repaid. Will inflation continue? Whether we see a one-time price-level increase or...

MTBFs generally cover the preparation, execution, and monitoring of multiannual budget plans and encompass expenditure and revenue predictions. Overall, a well-designed MTBF reflects the impact of past budgetary obligations and the future cost of new policy measures. It is explained by the...

We build and estimate a novel TANK model with partially unfunded debt to study whether the record high debt-to-GDP ratio threatens US inflation stability. In response to business cycle shocks, the monetary authority controls inflation, and the fiscal authority stabilizes debt. The central bank...

Das Eurosystem hat bis Dezember 2018 im Rahmen des Public Sector Purchase Programme (PSPP) Staatsanleihen für fast 2,2 Billionen Euro erworben, um (laut offizieller Begründung) die Inflationsrate auf den Zielwert von knapp 2 % zu bringen. Nicht wenige Ökonomen qualifizieren die Anleihekäufe...

The scientific reassessment of the economic role of the state after the crisis has renewed interest in Abba Lerner’s theory of functional finance (FF). A thorough discussion of this concept is helpful in reconsidering the debate on the nature of money and the origin of the business cycle and...

The current low interest rate environment limits the tools of the central bank to stabilize the economy, while the large public debt curtails the efficacy of fiscal interventions by inducing expectations of costly fiscal adjustments. Against this background, we study the implications of a...

The Federal Reserve's policies have large and growing fiscal effects that most tax analysts are unaware of. For example, its deposits to the Treasury amount to almost 4 percent of federal revenues. And in the National Income and Product Accounts, the Fed accounts for almost 25 percent of all...

This paper develops a simple framework to examine the budgetary implications of monetary policy measures. It further outlines, using this framework, the various channels of influence that tight monetary policy may have on the budget deficit. The cumulative effect might be quantitatively large...