Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/154375 
Year of Publication: 
2016
Series/Report no.: 
ECB Working Paper No. 1942
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
We provide a general equilibrium framework for analyzing the effects of supply and demand side policies, and the potential synergies between them, in an asymmetric monetary union that faces a liquidity trap and a slow deleveraging process in its ‘periphery‘. We find that the joint implementation of pro-competition structural reforms in the periphery, a fiscal expansion in the core, and forward guidance about the future path of nominal interest rates produces positive synergies between the three policies: forward guidance re-inforces the expansionary effects of country-specific policies, and the latter in turn improve the effectiveness of forward guidance. Our results provide a case for complementing current unconventional monetary stimuli in the euro area with national efforts on the structural reform and fiscal fronts.
Subjects: 
deleveraging
monetary union
structural reforms
synergies
zero lower bound
JEL: 
E44
E63
D42
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-2190-9
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.