This paper employs the DSGE model with rich fiscal block to examine the asymmetries in the transmission and effectiveness of the government expenditure shock across the active fiscal and passive monetary policy (AFPM) regime and the active monetary and passive fiscal policy (AMPF) regime in the...

We show that a .scal expansion by the core economies of the euro area would have a large and positive impact on periphery GDP assuming that policy rates remain low for a prolonged period. Under our preferred model speci.cation, an expansion of core government spending equal to one percent of...