The last review of the ECB’s monetary policy strategy in 2003 followed a period of predominantly upside risks to price stability. Experience following the 2008 financial crisis has focused renewed attention on the question of how monetary and fiscal policy should best interact, in particular...

Not since the Great Depression have monetary policy matters and institutions weighed so heavily in commercial, financial, and political arenas. Apart from the eurozone crisis and global monetary policy issues, for nearly two years all else has counted for little more than noise on a relative...

This paper explains the European debt crisis not as a result of insufficient fiscal discipline but as the result of a constructional flaw of the EMU. The reason for this flaw are the diverging real interest rates in EMU countries, which trigger self-reinforcing debt-spirals in the presence of...

I develop and analyze a DSGE model of a currency union to revise the question of how to conduct monetary and fiscal policy in countries that share the same currency. In contrast with the previous literature which assumes coordination, this paper analyzes the case where coordination lacks among...

To raise the euro's inflation target without an inflationary default and meanwhile to promote growth and the realignment of the relative prices and wages between countries, two other heterodox actions are necessary: the substitution of previously issued bonds by new ones with higher denominated...

Only by having a proper understanding of the function of money and finance in the economy can we hope to correctly inform decision making in monetary and fiscal policy. This paper will argue that neoclassical economics fails to do this, which results in suboptimal decision making from...

We review the debate on the monetary and fiscal policy measures that were adopted in response to the pandemic shock in advanced economies, as well as others that could be taken in the near future, once the health emergency is over. The pandemic is an exceptional global health shock, which has...

The last review of the ECB’s monetary policy strategy in 2003 followed a period of predominantly upside risks to price stability. Experience following the 2008 financial crisis has focused renewed attention on the question of how monetary and fiscal policy should best interact, in particular...

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 paper employs a two-country New Keynesian DSGE model to assess the macroeconomic impact of the changes in monetary policy frameworks and the fiscal support in the U.S. and euro area during the pandemic. Moving from a previous target of “below, but close to 2 percent” to a formal...