The ECB is running out of policy space: can fiscal policy help?

• Angela Capolongo ^[1] ; Daniel Gros ^[1]
  1. [1] Centre for European Policy Studies

     Centre for European Policy Studies

     Arrondissement Brussel-Hoofdstad, Bélgica

     
• Localización: Economics and Business Letters, ISSN-e 2254-4380, Vol. 9, Nº. Extra 3, 2020 (Ejemplar dedicado a: Selected papers from 7th International PhD Meeting in Economics 2019), págs. 216-220
• Idioma: inglés
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• Resumen

  • The European Central Bank is running out of instruments for addressing persistent low inflation. In this paper, we assess if a fiscal policy expansion could help the ECB reaching its target. Using ten mainstream models, we find only a modest and temporary impact of a fiscal deficit of 1% of GDP on inflation.