Towards a new paradigm: The inflation shock as a catalyst?

Arbeitspapier

During the recent inflation episode, the paradigm of separated objectives for monetary and fiscal policies has shown some limits. Fiscal policies have helped mitigate inflation. We advocate for the emergence of a new paradigm that gives equal consideration to fiscal and monetary policies and their interactions. These interactions and their respective spillover effects demand better political coordination and a good dose of pragmatism, in contrast with the binding rules embedded in the separation paradigm so present in the European governance framework. The latter should give more leeway to supply-driven fiscal policies and learn from the US experience.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Papers ; No. 04/2024

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General ; Crisis Management
• Subject: fiscal policy ; monetary policy ; inflation ; Tinbergen ; coordination

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Creel, Jérôme ; Geerolf, François ; Levasseur, Sandrine ; Ragot, Xavier ; Saraceno, Francesco
• Event: Veröffentlichung
• (who): Forum for a New Economy
• (where): Berlin
• (when): 2024

Further information

• Last update: 10.03.2025, 11:44 AM CET