One of the main contributions of Modern Money Theory (MMT) has been to explain why monetarily sovereign governments have a very flexible policy space that is unconstrained by hard financial limits. Not only can they issue their own currency to pay public debt denominated in their own currency,...

This paper analyses the issue of the dynamics of the TARGET2 system balances during the sovereign debt crisis, when some countries registered a decisive inflow of the central bank liquidity and others showed an outflow. The dynamics in the TARGET2 are here explained as being due to a fall in the...

This thesis was written by Jakob Eberl while having been a research assistant at the Center for Economic Studies (CES) at the University of Munich. It was completed in December 2015 and accepted as a doctoral thesis by the Department of Economics at the University of Munich in May 2016. The...

This paper argues that the loose monetary policy of two of the world’s most important financial institutions-the US Federal Reserve Board and the European Central Bank-were ultimately responsible for the outburst of global financial crisis of 2008 - 09. Unusually low interest rates in 2001 -...

To reinforce the long-term sustainability of public finances, the South African National Treasury has proposed a set of fiscal guidelines informed by three principles, namely: a counter-cyclical fiscal stance, long-term debt sustainability and inter-generational equity. Owing to the sound...

Over the past decade, prudent fiscal management has served Thailand well in cushioning the impact of the global financial turbulence. However, going forward, fiscal risks which include a weakened global economic outlook, unbalanced fiscal structure and growing contingent liabilities may have...

Does an inflation conservative central bank agrave; la Rogoff (1985) remain desirable in a setting with endogenous fiscal policy? To provide an answer we study monetary and fiscal policy games without commitment in a dynamic stochastic sticky price economy with monopolistic distortions. Monetary...

The paper aims to shed light on the relation between monetary and fiscal policy in EMU, focusing on the interest rates and deficit dynamics. We present a theoretical model in which monetary and fiscal policy independently interact in a closed economic system through their own instrument, namely,...

This study investigates the evolution of central bank profits as fiscal revenue (or: seigniorage) before and in the aftermath of the global financial crisis of 2008-9, focusing on a select group of central banks - namely the Bank of England, the United States Federal Reserve System, the Bank of...

How should independent central banks react if pressured by fiscal policymakers? We study an environment with strategic monetary-fiscal interactions where the central bank has a limited degree of commitment to follow policies over time and the fiscal authority has none. We contrast the...