The distributional and disruptive effects of energy supply shocks are potentially large. We study the effectiveness of alternative fiscal responses in a two-country HANK model calibrated to the euro area. Subsidies can stabilize the domestic economy, but they are fiscally costly and generate...

Carsten Breuer, Generalinspekteur der Bundeswehr, betont, dass Deutschland im vierten Jahr des russischen Angriffskriegs weiter an der Seite der Ukraine steht, sich aber auch mit einer möglichen direkten Aggression Russlands gegen die NATO und gegen den Westen auseinandersetzen muss. Schon...

Major geopolitical events have global repercussions, but their economic impact differs vastly across space. Analyzing stock market reactions to the war in Ukraine, we detect a large “proximity penalty.” Neighboring countries, on average, incurred an abnormal decline in equity indices of...

We assess whether "undue optimism" (Pigou) contributes to business cycle fluctuations. In our analysis, optimism (or pessimism) pertains to total factor productivity which determines economic activity in the long run. Optimism shocks are perceived changes in productivity which do not actually...

Using vector autoregressions on U.S. time series for 1957-1979 and 1983-2004, we find government spending shocks to have stronger effects on output, consumption, and wages in the earlier sample. We try to account for this observation within a DSGE model featuring price rigidities and limited...

Currently the U.S. is experiencing record budget and current account deficits, a phenomenon familiar from the Twin Deficits discussion of the 1980s. In contrast, during the 1990s productivity growth has been identified as the primary cause of the U.S. current account deficit. We suggest a...