| Global policy at the Zero Lower Bound in a large-scale DSGE model |
Sandra Gomes;
P. Jacquinot;
Ricardo Mestre;
João Sousa |
| 2010 |
| 18 |
The purpose of this paper is to analyse whether fiscal policies can alleviate the effects of the zero lower bound (ZLB) on interest rates and if they should be coordinated internationally. The analysis is carried out using EAGLE, a DSGE model of the global economy. We consider that the fiscal shocks are temporary and that fscal policy retains full credibility at all times. In this setup we find significant non-linearities in a ZLB situation that amplify the
effects of fiscal shocks compared to the non-ZLB case. International coordination is helpful but does not play a major role in the results. |
E52 - Monetary Policy (Targets, Instruments, and Effects);
E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation;
E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization;
F42 - International Policy Coordination and Transmission |
| ECB Working Paper No. 1254, October 2010 |
| Global policy at the Zero Lower Bound in a large-scale DSGE Model |