Niccolò Battistini, Giovanni Callegari, 11 March 2020

With monetary policy constrained by the effective lower bound, the debt sustainability implications of a fiscal expansion are a pressing concern. This column shows that in a general equilibrium model of fiscal limits, the adverse impact of a fiscal expansion on sustainability is muted at the effective lower bound compared with normal times. Getting the timing of public spending increases right, however, is essential for containing sustainability risks.

Alex Cukierman, 02 November 2018

The size and nature of an economy have a crucial influence on the measures that can be taken in response to major shocks. This column investigates the forex interventions taken by Switzerland and Israel – two small, open economies – in the wake of the Global Crisis. While discretionary interventions are shown to be preferable when policy rates are strictly positive, this is no longer valid when the effective lower bound is reached and unconventional monetary policy is called for. The transfer of reserve management to a sovereign wealth fund is also discussed. 

Felix Geiger, Fabian Schupp, 26 September 2018

In the low interest-rate setting, the Eurosystem’s accommodative monetary policy has been relying to a greater extent on non-standard measures and forward guidance on the future path of policy rates. This column examines how these measures have worked across the term structure and how market expectations have evolved during the phase of low interest rates.The results illustrate that the Eurosystem can continue to influence market participants’ interest rate expectations at the effective lower bound through unconventional monetary policy measures.

Events

CEPR Policy Research