In a recent column, the authors suggested coordinating monetary and fiscal expansions in the Eurozone through a money-financed temporary tax cut. The effectiveness of their proposal, however, has been questioned. In this column, the authors address some of the criticisms. They argue that the counter-cyclical fiscal policies adopted by the US and the UK, together with monetary easing, had a stabilising effect on output. Moral hazard due to the more lax monetary and fiscal policies is avoidable, increasing the credibility of the future spending cuts.
Francesco Giavazzi, Guido Tabellini, 25 September 2014
Francesco Giavazzi, Guido Tabellini, 21 August 2014
The stagnating Eurozone economy requires policy action. This column argues that EZ leaders should agree a coordinated 5% tax cut, extension of budget deficit targets by 3 or 4 years, and issuance of long-term public debt to be purchased by the ECB without sterilisation.
Most Read
Vox eBooks
Casey, Crane, Gensler, Johnson, Narula, 16 July 2018
Vox Talks
Events
-
20 - 21 August 2018 / Goethe University Frankfurt / Central Bank Research Association (CEBRA) and the Research Center SAFE (Sustainable Architecture for Finance in Europe) at Goethe University Frankfurt
-
27 - 28 August 2018 / Sala del Sindaco, Palazzo Orsini, Galatina (Lecce) / Banque de France and Paris School of Economics
-
2 - 5 September 2018 / Albert Ludwigs University Freiburg / Verein fuer Socialpolitik
-
10 - 11 September 2018 / Leipzig University / Leipzig University, European Association of Young Economists
-
12 - 13 September 2018 / Rome, Italy / European Center of Sustainable Development , CIT University
