In a floor system of monetary policy implementation, the central bank remunerates bank reserves at or near the market rate of interest. Some observers have expressed concern that operating such a system will have adverse fiscal consequences for the public sector and may even require the...

Historically high levels of private and public debt coupled with already very low short-term interest rates appear to limit the options for stimulative monetary policy in many advanced economies today. One option that has not yet been considered is monetary financing by central banks to boost...

This paper investigates Germany's vulnerability to the ongoing Euroland crisis. In 2010-11, Germany experienced a strong rebound from the global financial crisis of 2008-09. The Euroland crisis then meant record low interest rates and a depressed euro that boosted German extra-area exports. But...

In a fixed-regime setting, it is known since Leeper (1991) that both monetary dominance (mix of active monetary and passive fiscal policies) and fiscal dominance (mix of active fiscal and passive monetary policy) regimes yield a determinate unique equilibrium. This paper shows that in a...

This paper makes three points. The first is that external imbalances between Member States are relevant for the performance of a monetary union when the latter is not backed by a strong political commitment and a solid political framework. Eurozone policymakers have ignored these inter-member...

The article is a comment on Alessandrini and Fratianni (2015) (A&F), on how can the euro area cope with inter-regional differences in the absence of fiscal union. A&F develop a model to support their proposals, against which twomain remarks are raised here. First, diverging current account...

The authors (A&F) reply to Andrea Terzi's comment on their previous paper, published in the December 2015 issue of this Review. Andrea Terzi's two main objections to A&F analysis are: that diverging current-account (CA) balances enhanced the fragility of the member countries of the euroarea, but...

In a floor system of monetary policy implementation, the central bank remunerates bank reserves at or near the market rate of interest. Some observers have expressed concern that operating such a system will have adverse fiscal consequences for the public sector and may even require the...

There is partial consensus that the size of money — or liquidity — in China should be large reflecting the high savings rate. Even so, with a sense of a liquidity overhang from the recent monetary expansion, many caution against expanding liquidity further lest it translate into a property...

We study whether the adoption of the Euro and a single monetary policy have brought about a change in the monetary transmission mechanism and between the interactions of monetary policy, fiscal policy and financial stress in the Euro area. We find that the stylized facts of monetary transmission...