Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154375
Authors: 
Arce, Óscar
Hurtado, Samuel
Thomas, Carlos
Year of Publication: 
2016
Series/Report no.: 
ECB Working Paper 1942
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

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