The euro area has been experiencing a prolonged period of weak economic activity and very low inflation. This paper reviews models of business cycle stabilization with an eye to formulating lessons for policy in the euro area. According to standard models, after a large recessionary shock...

Helicopter money has once been proposed as a theoretical thought experiment by Milton Friedman in order to elucidate the effect of money injections into the macroeconomy over time. However, some Euro area member states nowadays consider helicopter money, i.e. permanent Quantitative Easing (QE),...

The significant role of government consumption in affecting economic conditions raises the necessity for monetary policy to take into account the behaviour of fiscal policy and to also take into account how the presence of the fiscal sector might affect the transmission mechanism of monetary...

Helicopter money has once been proposed as a theoretical thought experiment by Milton Friedman in order to elucidate the effect of money injections into the macroeconomy over time. However, some Euro area member states nowadays consider helicopter money, i.e. permanent Quantitative Easing (QE),...

This paper considers how a range of economies are adjusting to the external imbalances that they faced at the beginning of the current crisis. It also considers how the real economy may adjust when recovery eventually takes hold. Finally it considers how the adjustments under way will contribute...

Before the 2008 crisis, national fiscal policies were used passively within the European Union to reduce budget deficits and public debt, and the common monetary policy was used actively to control inflation via the interest rates. This policy mix represented the only form of macroeconomic...