Financial stability risks have become topical in the wake of the global financial crisis and the subsequent extended period of very low interest rates. This paper investigates the significance of the mix of monetary and fiscal policies for financial stability through counterfactual simulations...

We show that policy uncertainty about how the rising public debt will be stabilized accounts for the lack of deflation in the US economy at the zero lower bound. We first estimate a Markov-switching VAR to highlight that a zero-lower-bound regime captures most of the comovements during the Great...

Currently, China's expansionary fiscal policy and tight monetary policy have formed an opposing policy mix. This is due to the imbalanced macro-economy, which suffers from the pressures of inflation and slow growth. In response to economic changes, China adjusted its monetary policy as the real...