Arbeitspapier

Can we prevent boom-bust cycles during euro area accession?

Euro-area accession caused boom-bust cycles in several catching-up economies. Declining interest rates and easier financing conditions fuelled spending and worsened the current account balance. Over time inflation deteriorated external competitiveness and lowered domestic demand, turning the boom into a bust. We ask whether such a scenario can be avoided using macroeconomic tools that are available in the period of joining a monetary union: central parity revaluation, fiscal tightening or increased taxation. While all these policies can be used to cool down the output boom, exchange rate revaluation seems the most attractive option. It simultaneously trims the expansion of output and domestic demand, reduces the cost pressure and ranks first in terms of welfare.

Sprache
Englisch

Erschienen in
Series: ECB Working Paper ; No. 1280

Klassifikation
Wirtschaft
Monetary Policy
Central Banks and Their Policies
Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
Thema
Boom-bust cycles
dynamic general equilibrium models
euro area accession

Ereignis
Geistige Schöpfung
(wer)
Brzoza-Brzezina, Michał
Jacquinot, Pascal
Kolasa, Marcin
Ereignis
Veröffentlichung
(wer)
European Central Bank (ECB)
(wo)
Frankfurt a. M.
(wann)
2010

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

  • Brzoza-Brzezina, Michał
  • Jacquinot, Pascal
  • Kolasa, Marcin
  • European Central Bank (ECB)

Entstanden

  • 2010

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