The recent European economic crisis has dramatically exposed the failures of the various institutional mechanisms in place to maintain economic stability in Europe, and has unveiled the difficulty in achieving international coordination on fiscal and financial stability policies. Drawing on the...

This paper studies monetary and fiscal policy rules, and investigates the characteristics of optimal policies. The central focus of the paper is on the comparison of two types of fiscal rules: a balanced budget and a target for the primary surplus. Balanced budget rules (or, more generally,...

We develop the theory of price-level determination in a range of models using both ad hoc policy rules and jointly optimal monetary and fiscal policies and discuss empirical issues that arise when trying to identify monetary–fiscal regime. The chapter concludes with directions in which...

This paper reviews recent developments in US monetary policy and then discusses some possible reforms that might be considered to modify the behavior of the Federal Reserve System. Since its creation a century ago, the Federal Reserve System has grown from a narrowly defined central bank...

Mit dem anstehenden Staatsanleihen-Kaufprogramm 'Outright Monetary Transactions' (OMT) der Europäischen Zentralbank (EZB) in Verbindung mit dem kürzlich eingesetzten Europäischen Stabilitätsmechanismus (ESM) hat das Thema 'monetäre Staatsfinanzierung' viel Aufmerksamkeit erfahren (z.B....

Using the government's intertemporal budget constraint, we quantify the contribution of returns paid on the U.S. government's debt portfolio to the evolution of the debt-to-GDP ratio. We show that announcements of unconventional monetary policy measures by the Federal Reserve between 2008.IV and...

The paper analyses the EU fiscal rules from a political economy perspective and derives some policy lessons. Following a literature survey, the paper stresses the importance of appropriate incentives for rule compliance in an environment where national fiscal sovereignty precludes the option of...

Over the last few decades, real interest rates have trended downward in many countries. The most common explanation is that this reflects depressed demand due to demographic, technological and other real factors such as income inequality. In this paper we explore the claim that these trends may...