The Euro-area now has a single monetary policy, administered by the European Central Bank. The succedss of such a 'one policy fits all' system depends in part on the mechanisms by which decisions on interest rates, etc. affect the real economy. This study examines various differences between...

A fiscal shock due to a shift in taxes or in government spending will, at some point in time, constrain the future path of taxes and spending, since the government’s intertemporal budget constraint will eventually have to be met. This simple fact is surprisingly overlooked in analyses of the...