Arbeitspapier
Counter-cyclical fiscal rules and the zero lower bound
We analyse the effectiveness of optimal simple and implementable monetary and fiscal policy rules in stabilising economic activity, inflation and government debt in face of an occasionally binding lower bound on the nominal interest rate in a New Keynesian model. We show that, within the traditional assignment of active monetary policy and passive fiscal policy, the optimal fiscal policy rule features a strong counter-cyclical response to the deviation of inflation from the central bank's target - providing significant macroeconomic stabilisation especially at the lower bound - while also featuring a strong response to government debt. Our quantitative results show that the optimal counter-cyclical fiscal feedback to inflation significantly improves welfare and reduces the lower-bound frequency. In addition, the optimal simple monetary and fiscal rules almost completely resolve the deflationary bias associated with the lower bound.
- ISBN
-
978-92-899-5300-9
- Sprache
-
Englisch
- Erschienen in
-
Series: ECB Working Paper ; No. 2715
- Klassifikation
-
Wirtschaft
Price Level; Inflation; Deflation
Monetary Policy
Policy Objectives; Policy Designs and Consistency; Policy Coordination
Fiscal Policy
- Thema
-
Fiscal Rules
Zero Lower Bound
Inflation Targeting
Deflationary Bias
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Hauptmeier, Sebastian
Kamps, Christophe
Radke, Lucas
- Ereignis
-
Veröffentlichung
- (wer)
-
European Central Bank (ECB)
- (wo)
-
Frankfurt a. M.
- (wann)
-
2022
- DOI
-
doi:10.2866/887345
- Handle
- Letzte Aktualisierung
- 10.03.2025, 11:45 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft.
Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Hauptmeier, Sebastian
- Kamps, Christophe
- Radke, Lucas
- European Central Bank (ECB)
Entstanden
- 2022
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