This paper studies the generation and transmission of international cycles in a multi-country model with production and consumption interdependencies. Two sources of disturbance are considered, and three channels of propagation are compared. In the short run the contemporaneous correlation of...

In the light of new theoretical and empirical work on the Permanent Income Hypothesis we tackle earlier findings for German data, which reject its validity given a large fraction of liquidity constrained consumers. Starting from a standard short run approach we do not find evidence for excess...

We analyse the effectiveness of fiscal policy rules for business cycle stabilisation in a monetary union using a quarterly macro-econometric model of Germany. The simulations compare a deficit target and an expenditure target under a range of supply, demand and fiscal shocks. Their effects are...