How Loose, How Tight? A Measure of Monetary and Fiscal Stance for the Euro Area

How Loose, How Tight? A Measure of Monetary and Fiscal Stance for the Euro Area

Author: Nicoletta Batini

Publisher: International Monetary Fund

Published: 2020-06-05

Total Pages: 75

ISBN-13: 1513546082

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This paper builds a model-based dynamic monetary and fiscal conditions index (DMFCI) and uses it to examine the evolution of the joint stance of monetary and fiscal policies in the euro area (EA) and in its three largest member countries over the period 2007-2018. The index is based on the relative impacts of monetary and fiscal policy on demand using actual and simulated data from rich estimated models featuring also financial intermediaries and long-term government debt. The analysis highlights a short-lived fiscal expansion in the aftermath of the Global Financial Crisis, followed by a quick tightening, with monetary policy left to be the “only game in town” after 2013. Individual countries’ DMFCIs show that national policy stances did not always mirror the evolution of the aggregate stance at the EA level, due to heterogeneity in the fiscal stance.


Book Synopsis How Loose, How Tight? A Measure of Monetary and Fiscal Stance for the Euro Area by : Nicoletta Batini

Download or read book How Loose, How Tight? A Measure of Monetary and Fiscal Stance for the Euro Area written by Nicoletta Batini and published by International Monetary Fund. This book was released on 2020-06-05 with total page 75 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper builds a model-based dynamic monetary and fiscal conditions index (DMFCI) and uses it to examine the evolution of the joint stance of monetary and fiscal policies in the euro area (EA) and in its three largest member countries over the period 2007-2018. The index is based on the relative impacts of monetary and fiscal policy on demand using actual and simulated data from rich estimated models featuring also financial intermediaries and long-term government debt. The analysis highlights a short-lived fiscal expansion in the aftermath of the Global Financial Crisis, followed by a quick tightening, with monetary policy left to be the “only game in town” after 2013. Individual countries’ DMFCIs show that national policy stances did not always mirror the evolution of the aggregate stance at the EA level, due to heterogeneity in the fiscal stance.

Fiscal Politics in the Euro Area

Fiscal Politics in the Euro Area

Author: Luc Eyraud

Publisher: International Monetary Fund

Published: 2017-01-30

Total Pages: 44

ISBN-13: 1475572913

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This paper provides evidence of fiscal procyclicality, excessive deficits, distorted budget composition and poor compliance with fiscal rules in the euro area. Our analysis relies on real-time data for 19 countries participating in the euro area over 1999–2015. We look for, but do not find, conclusive evidence of bias in procedures in relation to country size. The paper also briefly reviews the literature on political economy factors and policy biases, and offers some reflections on the euro area architecture.


Book Synopsis Fiscal Politics in the Euro Area by : Luc Eyraud

Download or read book Fiscal Politics in the Euro Area written by Luc Eyraud and published by International Monetary Fund. This book was released on 2017-01-30 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides evidence of fiscal procyclicality, excessive deficits, distorted budget composition and poor compliance with fiscal rules in the euro area. Our analysis relies on real-time data for 19 countries participating in the euro area over 1999–2015. We look for, but do not find, conclusive evidence of bias in procedures in relation to country size. The paper also briefly reviews the literature on political economy factors and policy biases, and offers some reflections on the euro area architecture.

Coordination of Monetary and Fiscal Policies

Coordination of Monetary and Fiscal Policies

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 1998-03-01

Total Pages: 33

ISBN-13: 1451844239

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Recently, monetary authorities have increasingly focused on implementing policies to ensure price stability and strengthen central bank independence. Simultaneously, in the fiscal area, market development has allowed public debt managers to focus more on cost minimization. This “divorce” of monetary and debt management functions in no way lessens the need for effective coordination of monetary and fiscal policy if overall economic performance is to be optimized and maintained in the long term. This paper analyzes these issues based on a review of the relevant literature and of country experiences from an institutional and operational perspective.


Book Synopsis Coordination of Monetary and Fiscal Policies by : International Monetary Fund

Download or read book Coordination of Monetary and Fiscal Policies written by International Monetary Fund and published by International Monetary Fund. This book was released on 1998-03-01 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recently, monetary authorities have increasingly focused on implementing policies to ensure price stability and strengthen central bank independence. Simultaneously, in the fiscal area, market development has allowed public debt managers to focus more on cost minimization. This “divorce” of monetary and debt management functions in no way lessens the need for effective coordination of monetary and fiscal policy if overall economic performance is to be optimized and maintained in the long term. This paper analyzes these issues based on a review of the relevant literature and of country experiences from an institutional and operational perspective.

Monetary-fiscal Interaction

Monetary-fiscal Interaction

Author:

Publisher:

Published: 2023

Total Pages: 0

ISBN-13: 9789284810703

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Achieving a balanced monetary-fiscal policy mix in the euro area is crucial to ensure that monetary policy is able to fulfil its primary price stability objective. This paper outlines, from an economic and legal perspective, the interaction between monetary and fiscal policy in light of the current monetary and fiscal stance and, in particular, the "quasi-fiscal" effects of some unconventional monetary policy measures. Since sustainable public finances are a prerequisite for a price-stability-oriented single monetary policy, the paper also analyses the EU economic governance review proposals. This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 25 September 2023.


Book Synopsis Monetary-fiscal Interaction by :

Download or read book Monetary-fiscal Interaction written by and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Achieving a balanced monetary-fiscal policy mix in the euro area is crucial to ensure that monetary policy is able to fulfil its primary price stability objective. This paper outlines, from an economic and legal perspective, the interaction between monetary and fiscal policy in light of the current monetary and fiscal stance and, in particular, the "quasi-fiscal" effects of some unconventional monetary policy measures. Since sustainable public finances are a prerequisite for a price-stability-oriented single monetary policy, the paper also analyses the EU economic governance review proposals. This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 25 September 2023.

World Economic Outlook, April 2019

World Economic Outlook, April 2019

Author: International Monetary Fund. Research Dept.

Publisher: International Monetary Fund

Published: 2019-04-09

Total Pages: 216

ISBN-13: 1484397487

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After strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, reflecting a confluence of factors affecting major economies. China’s growth declined following a combination of needed regulatory tightening to rein in shadow banking and an increase in trade tensions with the United States. The euro area economy lost more momentum than expected as consumer and business confidence weakened and car production in Germany was disrupted by the introduction of new emission standards; investment dropped in Italy as sovereign spreads widened; and external demand, especially from emerging Asia, softened. Elsewhere, natural disasters hurt activity in Japan. Trade tensions increasingly took a toll on business confidence and, so, financial market sentiment worsened, with financial conditions tightening for vulnerable emerging markets in the spring of 2018 and then in advanced economies later in the year, weighing on global demand. Conditions have eased in 2019 as the US Federal Reserve signaled a more accommodative monetary policy stance and markets became more optimistic about a US–China trade deal, but they remain slightly more restrictive than in the fall.


Book Synopsis World Economic Outlook, April 2019 by : International Monetary Fund. Research Dept.

Download or read book World Economic Outlook, April 2019 written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 2019-04-09 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt: After strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, reflecting a confluence of factors affecting major economies. China’s growth declined following a combination of needed regulatory tightening to rein in shadow banking and an increase in trade tensions with the United States. The euro area economy lost more momentum than expected as consumer and business confidence weakened and car production in Germany was disrupted by the introduction of new emission standards; investment dropped in Italy as sovereign spreads widened; and external demand, especially from emerging Asia, softened. Elsewhere, natural disasters hurt activity in Japan. Trade tensions increasingly took a toll on business confidence and, so, financial market sentiment worsened, with financial conditions tightening for vulnerable emerging markets in the spring of 2018 and then in advanced economies later in the year, weighing on global demand. Conditions have eased in 2019 as the US Federal Reserve signaled a more accommodative monetary policy stance and markets became more optimistic about a US–China trade deal, but they remain slightly more restrictive than in the fall.

Fiscal Rules—Anchoring Expectations for Sustainable Public Finances

Fiscal Rules—Anchoring Expectations for Sustainable Public Finances

Author: International Monetary Fund. Fiscal Affairs Dept.

Publisher: International Monetary Fund

Published: 2009-12-11

Total Pages: 73

ISBN-13: 1498335160

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The sharp increase in fiscal deficits and public debt in most advanced and several developing economies has raised concerns about the sustainability of public finances and highlighted the need for a significant adjustment over the medium term. This paper assesses the usefulness of fiscal rules in supporting fiscal consolidation, discusses the design and implementation of rules based on a new data base spanning the whole Fund membership, and explores the fiscal framework that could be adopted as countries emerge from the crisis.


Book Synopsis Fiscal Rules—Anchoring Expectations for Sustainable Public Finances by : International Monetary Fund. Fiscal Affairs Dept.

Download or read book Fiscal Rules—Anchoring Expectations for Sustainable Public Finances written by International Monetary Fund. Fiscal Affairs Dept. and published by International Monetary Fund. This book was released on 2009-12-11 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: The sharp increase in fiscal deficits and public debt in most advanced and several developing economies has raised concerns about the sustainability of public finances and highlighted the need for a significant adjustment over the medium term. This paper assesses the usefulness of fiscal rules in supporting fiscal consolidation, discusses the design and implementation of rules based on a new data base spanning the whole Fund membership, and explores the fiscal framework that could be adopted as countries emerge from the crisis.

Monetary Policy and the Housing Bubble

Monetary Policy and the Housing Bubble

Author:

Publisher: DIANE Publishing

Published:

Total Pages: 64

ISBN-13: 1437985297

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Book Synopsis Monetary Policy and the Housing Bubble by :

Download or read book Monetary Policy and the Housing Bubble written by and published by DIANE Publishing. This book was released on with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt:

What Caused the Global Financial Crisis

What Caused the Global Financial Crisis

Author: Erlend Nier

Publisher: International Monetary Fund

Published: 2010-11-01

Total Pages: 64

ISBN-13: 1455210722

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This paper investigates empirically the drivers of financial imbalances ahead of the global financial crisis. Three factors may have contributed to the build-up of financial imbalances: (i) rising global imbalances (capital flows), (ii) monetary policy that might have been too loose, (iii) inadequate supervision and regulation. Panel data regressions are performed for OECD countries from 1999 to 2007, so as to shed light on the relative importance of these factors, as well as the extent to which these factors might have interacted in fuelling the build-up. We find that the build-up of financial imbalances was driven by capital inflows and an associated compression of the spread between long and short rates. The effect of capital inflows on the build-up is amplified where the supervisory and regulatory environment was relatively weak. We find that, by contrast, differences in monetary policy cannot account for differences across countries in the build-up of financial imbalances ahead of the crisis.


Book Synopsis What Caused the Global Financial Crisis by : Erlend Nier

Download or read book What Caused the Global Financial Crisis written by Erlend Nier and published by International Monetary Fund. This book was released on 2010-11-01 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates empirically the drivers of financial imbalances ahead of the global financial crisis. Three factors may have contributed to the build-up of financial imbalances: (i) rising global imbalances (capital flows), (ii) monetary policy that might have been too loose, (iii) inadequate supervision and regulation. Panel data regressions are performed for OECD countries from 1999 to 2007, so as to shed light on the relative importance of these factors, as well as the extent to which these factors might have interacted in fuelling the build-up. We find that the build-up of financial imbalances was driven by capital inflows and an associated compression of the spread between long and short rates. The effect of capital inflows on the build-up is amplified where the supervisory and regulatory environment was relatively weak. We find that, by contrast, differences in monetary policy cannot account for differences across countries in the build-up of financial imbalances ahead of the crisis.

Managing the Sovereign-Bank Nexus

Managing the Sovereign-Bank Nexus

Author: Mr.Giovanni Dell'Ariccia

Publisher: International Monetary Fund

Published: 2018-09-07

Total Pages: 54

ISBN-13: 1484359623

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This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.


Book Synopsis Managing the Sovereign-Bank Nexus by : Mr.Giovanni Dell'Ariccia

Download or read book Managing the Sovereign-Bank Nexus written by Mr.Giovanni Dell'Ariccia and published by International Monetary Fund. This book was released on 2018-09-07 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.

Emerging Market Volatility

Emerging Market Volatility

Author: Ms.Ratna Sahay

Publisher: International Monetary Fund

Published: 2014-10-02

Total Pages: 29

ISBN-13: 1484356004

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Accommodative monetary policies in advanced economies have spurred increased capital inflows into emerging markets since the global financial crisis. Starting in May 2013, when the Federal Reserve publicly discussed its plans for tapering unconventional monetary policies, these emerging markets have experienced financial turbulence at the same that their domestic economic activity has slowed. This paper examines their experiences and policy responses and draws broad policy lessons. For emerging markets, good macroeconomic fundamentals matter, and early and decisive measures to strengthen macroeconomic policies and reduce vulnerabilities help dampen market reactions to external shocks. For advanced economies, clear and effective communication about the exit from unconventional monetary policy can and did help later to reduce the risk of excessive market volatility. And for the global community, enhanced global cooperation, including a strong global financial safety net, offers emerging markets effective protection against excessive volatility.


Book Synopsis Emerging Market Volatility by : Ms.Ratna Sahay

Download or read book Emerging Market Volatility written by Ms.Ratna Sahay and published by International Monetary Fund. This book was released on 2014-10-02 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Accommodative monetary policies in advanced economies have spurred increased capital inflows into emerging markets since the global financial crisis. Starting in May 2013, when the Federal Reserve publicly discussed its plans for tapering unconventional monetary policies, these emerging markets have experienced financial turbulence at the same that their domestic economic activity has slowed. This paper examines their experiences and policy responses and draws broad policy lessons. For emerging markets, good macroeconomic fundamentals matter, and early and decisive measures to strengthen macroeconomic policies and reduce vulnerabilities help dampen market reactions to external shocks. For advanced economies, clear and effective communication about the exit from unconventional monetary policy can and did help later to reduce the risk of excessive market volatility. And for the global community, enhanced global cooperation, including a strong global financial safety net, offers emerging markets effective protection against excessive volatility.