Citation

Canale, R.R. and Mirdala, R. (2019), "Index", Fiscal and Monetary Policy in the Eurozone: Theoretical Concepts and Empirical Evidence, Emerald Publishing Limited, Leeds, pp. 195-202. https://doi.org/10.1108/978-1-78743-793-720191004

Publisher

:

Emerald Publishing Limited

Copyright © 2019 Emerald Publishing Limited

---

INDEX

Index

Note: Page numbers followed by “n” with numbers indicate footnotes.

Ad hoc money demand

, 150

Aggregate demand

, 15, 31

Asset Purchase Program (APP)

, 135

Asset-Backed Securities Purchase Program (ABSPP)

, 135–136

Asymmetric shocks

, 9–12

Automatic balancing mechanisms

, 9–12

AWM models

, 50

Balance of payments

, 15

account equation

, 166

approach

, 73

equilibrium

, 60

motive

, 78

Balassa-Samuelson effect

, 25n5, 87, 89

Bank reserves

, 92, 118, 133

Barro theorem

, 42

Beggar-thy-neighbor policies

, 171–172

Bretton Woods

agreements

, 2, 6–7, 22

policy principles from World War II to Fall

, 12–22

Budget-balance-neutral fiscal policy

, 36–37

Capital mobility

, 7, 96

degree

, 14, 80

free

, 21, 169

Capital movements

, 118, 153

Central banks

, 26, 99, 105, 130

purchases

, 124

reaction function

, 35

in transition economies

, 118

Centralized monetary policy

, 158–159

Commission of the European Economic Cooperation (CEEC)

, 6

Compensation motive

, 78

Compensatory effect

, 78

Consensus mechanism

, 155

Consumption function

, 32–33, 40, 45–46, 50

Contemporary theory, Keynesian macroeconomics to

, 31–32

“Convergence criteria” of Maastricht Treaty

, 8

Corporate Sector Purchase Program (CSPP)

, 135

Crawling peg regime

, 102, 111–112

Credit transmission channel

, 115

Cross rates

, 6

Crowding-in effect

, 60

Crowding-out effects

, 34, 45–46, 48

in monetary union

, 59–62, 158

Cumulative structural public balance adjustment (CUM_SA)

, 173

Currency appreciation

, 85

Current account (CA)

, 166

Current debt/GDP ratio

, 55

Current inflation

, 35–36

Debt dynamics

, 62

Debt-to-GDP ratio

, 37, 55

Decentralized fiscal policy

, 158–159

Decision-making process

, 172

Deficit financing

, 82–83

Deflation

, 143

deficit financing

, 82–83

in Eurozone

, 83–84

purchase of real assets or foreign currency

, 83

selected approaches to

, 82

Deflationary environment

, 81

Degree of capital mobility

, 14

Delors Report

, 8

Demand function

, 160

aggregate

, 109

money

, 105, 119, 131, 139

Depreciation of domestic currency

, 85

“Dissuasive arm” instrument

, 37

Domestic nominal shocks

, 97

Domestic policy structure

, 154

Domestic price pressures

, 75

Dynamic aggregate supply

, 35–36

Dynamic IS equation (DIS equation)

, 149

Dynamic Stochastic General Equilibrium models (DSGE models)

, 44–45, 146

monetary policy in

, 146–151

Economic/economy

, 109–110

crisis

, 72, 91, 132–133, 137, 171

economic growth, relationship between inflation and

, 71–72

objectives

, 172

policies

, 29, 154–155, 171–172

theory

, 42, 99, 170

Economists

, 31

Effective market classification

, 15–16

Empirical literature

, 49–54

Employment

of inflation targeting

, 107

motive

, 76–77

Equilibrium income

, 31, 161

European Central Bank (ECB)

, 8, 48, 72, 165

formulation

, 126–127

global financial crisis and Great Recession

, 132–134

instruments employing by broad policy of liquidity provision

, 135–136

monetary policy beginning and adjustment

, 128–131

monetary policy evolution

, 126

monetary policy until financial crisis

, 131–132

single monetary policy

, 127–128

ultra-low inflation and QE

, 134–135

European Coal and Steel Community

, 6

European Community of Atomic Energy

, 6

European Council

, 8

European Council of Economic and Finance ministers (ECOFIN)

, 7

European currencies

, 6–7

European Economic Community (EEC)

, 6

European Financial Stability Facility (EFSF)

, 165n1

European Financial Stabilization Mechanism (EFSM)

, 165n1

European Monetary Institute (EMI)

, 127

European Monetary System (EMS)

, 8–9

European Monetary Union (EMU)

, 5, 52, 170

historical roots and events

, 5–12

European Recovery Program

, 6

European Stability Mechanism (ESM)

, 58, 165

European System of Central Banks

, 8

European transition economies

, 100

exchange rate regimes evolution in

, 101–104

Eurozone

, 158

deflation in

, 83–84

evolution of theoretical debate and case

, 44–49

financial market behavior

, 161

fiscal policy in

, 2

future

, 170–176

graphical representation

, 161–162

inflation drivers in

, 74–75

monetary policy in

, 2–3

national government behavior

, 159–161

policy coordination in

, 3

policy framework in

, 2

rules in

, 37–38

stylized model for country belonging to

, 158

sustainable shocks

, 162

unsustainable shocks

, 162–165

“Eurozone trilemma”

, 169, 175

triangle

, 170

Excessive deficit procedure (EDP)

, 37

Exchange rate

, 27, 45, 53, 61, 75, 89

consequences of exchange rate fluctuations

, 85–86

equation

, 111

and inflation relationship

, 84–85

monetary policy and exchange rate system

, 112–114

shock

, 73–75

targeting

, 94–104

transmission channel

, 116

Expansionary discretionary policy

, 62

Expansionary fiscal policies, inflation and output effects of

, 35–36

Expansive monetary policy

, 58

Expected devaluation

, 59

External equilibrium

, 165

policy coordination and

, 165–170

External imbalances

, 154

Federal Reserve

, 6–7

Federal-type political organization

, 7

Federalism

, 6

Financial crisis

, 38, 46, 59, 167

monetary policy until

, 131–132

Financial indicators

, 127

Financial markets

, 46, 58, 158–159

behavior

, 161

demand higher interest rate

, 163

Financial sector motive

, 78

Financing method

, 34

First Covered Bond Purchase Program (CBPP1)

, 136

Fiscal and Monetary Policy in the Eurozone

, 1–2

Fiscal approach

, 72

Fiscal Compact

, 38, 57–58, 165

Fiscal discipline

, 46

Fiscal dummy variable approach

, 51

Fiscal policy

, 15, 32, 137, 153–154, 156–157

budgetary discipline and left to management of individual states

, 28–29

demand

, 163

effectiveness

, 18–19, 21–22

empirical literature

, 49–54

in Eurozone

, 2, 37–38

evolution of theoretical debate and case of Eurozone

, 44–49

fiscal policy theory in Keynesian world

, 32–40

and intertemporal approach

, 40–44

issue of public debt

, 54–64

from Keynesian macroeconomics to contemporary theory

, 31–32

managed within general criterion of spending constraint

, 28

separation between monetary and

, 27–28

Fisher equation

, 25

Fixed exchange rates

, 94–95, 97–99, 155, 165, 171

regimes

, 20–22, 154, 166

Fixed nominal exchange rate

, 90

Flexible exchange rate

dilemma

, 98–99

regimes

, 17–19, 52

Foreign exchange operations

, 124–125

Foreign nominal shocks

, 97

Funds

, 159

GDP

, 9, 28, 30, 32–33, 37–38, 51, 62, 71

General Theory (1936)

, 31, 82

Generalized Taylor rule

, 144–145

Global financial crisis

, 132–134

Globalization process

, 3

Gold Exchange Standard

, 6

Governing Council of ECB

, 129

Government budget constrain implementation

, 150

Government markets

, 159

Graphical representation

, 161–162

Great Depression

, 139

“Great Moderation” period

, 147

Great Recession

, 132–134, 137

Growth plus inflation rate

, 54

“Haavelmo Theorem”

, 38

Harmonized Index of Consumer Prices (HICP)

, 128–129

Higher nominal interest rates

, 139

Impulse–response functions

, 51

Income effects

, 155

Income motive

, 77

Individual intertemporal preferences

, 41

Individual monetary aggregates

, 141

Inflation

, 27, 45–46, 93, 154

benefits associated with reducing rate of inflation

, 79

drivers in Eurozone

, 74–75

effects of reducing

, 79–82

exchange rate and inflation relationship

, 84–85

exchange rate shock

, 73–74

of expansionary fiscal policies

, 35–36

Fiscal approach

, 72–73

growth

, 128

monetary shock

, 74

impact of nominal wage rigidity

, 80

inflation-forecast targeting

, 107

premium

, 81

reducing inflation effects on real costs

, 80–81

relationship between economic growth and

, 71–72

sources

, 72

specific approaches to

, 76–78

Summers Effect

, 80

targeting

, 107–109, 125–126, 130

value

, 160

wage shock

, 73

Inflationary development

, 142

Inflationary effects

, 35

Inflationary monetary policy

, 66

Instrumental variables of economic policy

, 14

Integration process

, 3, 6

Interest as operational criteria

, 118–120

Interest rates

, 45, 48, 138, 154–155, 161, 169, 175

policy

, 132

International Monetary Fund (IMF)

, 105

International policy structure

, 154

International spillover effects

, 155–157

Intertemporal approach

, 40–44

Intertemporal choices approach

, 40

Intertemporal public budget constraint

, 42

Intra-Eurozone current account imbalances

, 91

Irrevocably fixed exchange rate regime

, 169

IS-LM model

, 115

Keynes approach

, 67

Keynesian economic theory

, 31

Keynesian effects of non-Keynesian fiscal policies

, 49

Keynesian macroeconometric models

, 148

Keynesian macroeconomics

to contemporary theory

, 31–32

model

, 13

Keynesian multiplier

, 40, 157

Keynesian revolution

, 22

Keynesian theory

, 2, 153–154

of economic policy

, 12

Keynesian vision

, 32

Keynesian world, fiscal policy theory in

, 32

effect on income of public expenditure

, 40

fiscal policy rules in Eurozone

, 37–38

inflation and output effects of expansionary fiscal policies

, 35–36

money-financed public expenditure

, 34

public sector budget constraint

, 33, 39

Labor mobility

, 96

Lagrangian function

, 41, 43

Liberalization process

, 3

Life-cycle consumption theory

, 40

Liquidity

constraints

, 45–46

trap

, 82

Long-run equilibrium income

, 46

Long-run multipliers

, 50

Long-run rate of growth

, 53–54

Long-term interest rates on government bonds

, 167–168

Long-term monetary neutrality

, 92

Low inflation economies

, 84

Low-growth regimes

, 51

Lucas critique

, 42

Maastricht Treaty

, 9, 28, 57, 158

convergence criteria of

, 8

Macroeconomic aspects

central bank

, 91–92

choice between inflation and price targeting

, 125–126

monetary policy conduction and

, 91

nominal anchor in monetary policy conduction

, 94–114

operational criterion in transmission mechanism of monetary policy

, 117–125

price stability

, 92–94

transmission mechanism of monetary policy

, 114–117

Macroeconomic consensus

, 1

Macroeconomic equilibrium

, 36

Macroeconomic model evolution

, 148

Macroeconomic stability

, 97, 100

Market-type operations

, 124

Marshall Plan

, 6

Material deprivation (MD)

, 173

McCallum rule

, 143

Medium-term objective (MTO)

, 37

Monetary conditions

, 53

Monetary instruments

, 122–123

Monetary market

, 46

Monetary policy

, 15, 54, 65, 117, 153–154, 156, 166

conduction and macroeconomic aspects

, 91–126

consequences of exchange rate fluctuations

, 85–86

controversies

, 137

in DSGE model

, 146–151

ECB’s monetary policy evolution

, 126–136

effectiveness

, 18, 20

effects of reducing inflation

, 79–82

in Eurozone

, 2–3

exchange rate and inflation relationship

, 84–85

inflation sources

, 72–78

interest rates

, 63

Phillips curve NAIRU

, 65–71

with purpose of maintaining price growth constant

, 28

qualitative and quantitative approach

, 137–140

real exchange rate

, 86–91

relationship between inflation and economic growth

, 71–72

rules vs. discretion

, 140–143

selected approaches to deflation

, 82–84

separation between fiscal and

, 27–28

shocks

, 151

single

, 28

strategy

, 45–46

Taylor rule

, 143–146

Monetary shock

, 74

Monetary strategy

, 127

Monetary targeting

, 105–106

Monetary transmission channel

, 116

Monetary Union, crowding-out effect in

, 59–62

Monetary Union case

, 46

Money demand function

, 105–106, 131, 139

Money growth

, 34

Money transmission channel

, 115

Money-financed public expenditure

, 34

MULTIMOD models

, 50

Mundell–Fleming model

, 17–22, 48, 57–58, 155, 167

Mundell–Fleming trilemma

, (see Mundell–Fleming model)

Narrow interpretation of Taylor rule

, 144–145

National currencies

, 6

National government behavior

, 159–161

National gross domestic product

, 31, 158

Natural rate of interest

, 149–150

Neoclassical synthesis

, 13

Net domestic assets (NDAs)

, 118–119

Net international reserves (NIR)

, 118

New Classical Economics

, 24

New classical macroeconomic models

, 148

New consensus macroeconomics, policy model of

, 22–27

New Keynesian DSGE models

, 148–149

New Keynesian economics

, 23–24

New Keynesian Phillips curve (NKPC)

, 149

New Neoclassical synthesis (NNS)

, 2, 24, 44–45

New-neoclassical synthesis

, 45–46

NIGEM model

, 50

Nominal anchor in monetary policy conduction

, 94

crawling peg regime

, 111–112

exchange rate targeting

, 94–104

inflation targeting

, 107–109

monetary policy and exchange rate system

, 112–114

monetary targeting

, 105–106

nominal income targeting

, 109–111

Nominal income targeting

, 109–111

Nominal interest rate

, 159

Nominal prices

, 67, 81

Nominal rate of GDP growth

, 54

Nominal wage rigidity impacts

, 80

Non-accelerating inflation rate of unemployment (NAIRU)

, 70, 145

Phillips curve

, 65–71

Non-Keynesian effects of Keynesian fiscal policy

, 44

Non-tradable good prices

, 87

Official interest rate

, 26

Open market operations

, 124

Operational criterion in transmission mechanism of monetary policy

, 117–125

Optimal currency area theory (OCA theory)

, 9–12

Output effects of expansionary fiscal policies

, 35–36

Past inflation

, 78

Payments

, 39–40

Phillips curve

, 25, 27

NAIRU

, 65–71

Policy “trilemma”

, 169

Policy advice

, 37

Policy coordination in Eurozone

, 3

consensus mechanism

, 155

and external equilibrium

, 165–170

fiscal policy

, 154

and future

, 170–176

general framework

, 153

international spillover effects under floating exchange rate regimes

, 155–157

national gross domestic products

, 158

stylized model for country belonging to Eurozone

, 158–165

Policy framework in Eurozone

, 2, 27–30, 46

EMU

, 5–12

policy model of new consensus macroeconomics

, 22–27

policy principles from World War II to Fall of Bretton Woods

, 12–22

Political credibility

, 97

Preventive arm instrument

, 37

Price effects

, 34

Price stability

, 92–94, 130, 158

Price targeting

, 125–126

Price variables

, 121

Primary deficit/GDP ratio

, 55

Production function

, 150

Public debt

, 154

repayments

, 80–81

Public debt issue

, 54–64

Public expenditure

, 33, 53–54, 60

Public sector budget constraint

, 33, 39

Public Sector Purchase Programme (PSPP)

, 135

Purchasing power parity (PPP)

, 80, 86, 88

Qualitative approach

impact to monetary policy conduction

, 123–125

to monetary policy conduction

, 137–140

Quantitative approach

impact to monetary policy conduction

, 123–125

to monetary policy conduction

, 137–140

Quantitative easing (QE)

, 72, 134–135

Quantitative variables as operational criteria

, 118–120

Quantity theory of money

, 34

Rational economic agents

, 68

Rational expectations

, 42

Real balance effect

, 159

Real business cycle theory (RBC theory)

, 23, 44, 148

Real costs, reducing inflation effects on

, 80–81

Real exchange rate

, 25, 86, 157

growth

, 160

prices of tradable and non-tradable goods

, 87–89

twin deficits (imbalances) in Eurozone

, 89–91

Real GDP growth rate

, 55

Real interest rate

, 25, 55, 139

Real market

, 46

Real shocks

, 97

Real value of money

, 81

Real-output-plus-inflation

, 144

“Relative effectiveness” principle

, 15–16

Ricardian equivalence

, 53

Ricardian Equivalence Theorem

, 42

Rules vs. discretion

, 140–143

Second Covered Bond Purchase Program (CBPP2)

, 136

Second generation DSGE models

, 147

Securities Markets Program (SMP)

, 133, 136

“Severe economic downturns”

, 38

Short-run market disequilibria

, 23

Short-term interest rates

, 118

Short-term multipliers

, 50

Short-term policies

, 27

Single monetary policy

, 127–128, 165, 171

Sole monetary dimension

, 31

Sound fiscal dynamics

, 162

Sound public finance

, 172

Stability and Growth Pact (SGP)

, 8, 37, 57

Stabilization policies

, 12

Stable market interest rates

, 118

Stagflation

, 22

Structural public balance

, 172

adjustments

, 54

change in structural balance and change in debt

, 63–64

crowding-out effect in monetary union

, 59–62

debt dynamics in case

, 56

ESM

, 58

GDP growth rates

, 62

growth of debt/GDP ratio

, 55

ten-year government bond yields

, 57

Stylized model for country belonging to Eurozone

, 158–165

Summers Effect

, 80

Super-Barro effect

, 44, 48–49, 52

Supply curve slope

, 35–36

Sustainable public finance

, 46

Sustainable shocks

, 162

Svensson model

, 107

Taylor rule

, 2, 24, 26, 29, 35, 143–146, 150

broad interpretation of

, 145–146

styled equation

, 96

Technology shock

, 150–151

Terms of trade (TOT)

, 71

Theoretical debate evolution

, 44–49

Third Covered Bond Purchase Program (CBPP3)

, 136

Time horizon

, 130–131

Time series regressions

, 50–51

Tradable good prices

, 87

Trade balance

, 153

Transition process

, 3

Transmission mechanism

of centralized monetary policy

, 158

interest and quantitative variables as operational criteria

, 118–120

of monetary policy

, 92, 114–117, 120–121

operational criteria and monetary instruments

, 122–123

operational criterion in

, 117–118

impact of quantitative and qualitative approach

, 123–125

Treaty of Rome

, 6

Treaty of Versailles

, 6n1

Twin deficits (imbalances) in Eurozone

, 89–91

Ultra-low inflation

, 134–135

Uncovered interest parity (UIP)

, 59

Unholy Trinity

, (see Mundell–Fleming model)

Union of European Federalists

, 6

“Unpleasant monetarist arithmetic”

, 154

Unsound fiscal dynamics

, 162, 164

Unsustainable shocks

, 162–165

Wage indexation

, 73, 76–77

Wage shock

, 73

Werner Report

, 7–8

Zero-lower bound

, 63