Related to this, a paper by @GiancarloCorse1, Dedola, Jarocinski, Mackowiak and @econschmidt shows how monetary and fiscal policies must work together at the ZLB to stabilise economic activity and inflation, temporarily switching to PM-AF. 13/ https://t.c
In the EA context, papers below show that monetary and fiscal policy *together* can stabilize economic activity and inflation, by coordinating on a non-defaultable eurobond. @GiancarloCorse1 Dedola @econschmidt et al: https://t.co/TtnV7miCxG https://t.co/W
But the ultimate backstop for sovereign bond markets is the ECB. Just like at the ZLB, also for #covid19 a monetary-fiscal policy mix is needed which makes public debt non-defaultable, and supports fiscal stimulus. 4/6 @GiancarloCorse1 https://t.co/nB1Jy
In line with the message of @GiancarloCorse1, Luca Dedola et al (2019): in a liquidity trap, with interest rates pegged to the ZLB, a switch to active fiscal + passive monetary policy mix is needed. #FTPL https://t.co/Wsd8nvobhv