This article looks at the evolution of the Target balance of the Greek central bank. It is shown that in the first 18 months “after Lehman”, lending policy has been relatively lax, contributing to the increase of Target deficits. However, from spring 2010 onwards, there has been a...

This paper analyses the short-run effects of fiscal consolidation measures on economic activity in the euro area during the euro crisis. It presents new econometric estimates on the link between cumulative GDP growth and fiscal austerity measures during 2011-2013. The main empirical finding is...

Unstable government debt dynamics can typically be corrected by various fiscal instruments, like appropriate adjustments in government spending, public transfers, or taxes. This paper investigates properties of state-contingent debt targeting rules which link stabilizing budgetary adjustments...

This paper analyzes German and Spanish fiscal policy using simple policy rules. We choose Germany and Spain, as both are Member States in the European Monetary Union (EMU) and underwent considerable increases in public debt in the early 1990s.We focus on the question, how fiscal policy behaves...

Using stochastic simulations, this paper analyses the probability distribution of a country's deficit ratio under fixed exchange rates and a variety of monetary policy rules. The purpose is to show how the probability of getting an "excessive deficit", defined as a deficit / GDP ratio in excess...

In this paper, we argue that rising debt levels have caused a revival of financial repression in the Euro Area and the US to reduce debt-servicing costs and even liquidate debt. We describe how, in addition to the “safe haven capital flight,” the Federal Reserve directly represses US bond...

This paper investigates whether monetary and exchange rate policies are important for the success of major fiscal adjustments. We assess their role controlling for other determinants of success identified in the literature, including the size and composition of the deficit cut, the level of...