Open AccessThe ECB is running out of policy space: can fiscal policy help?
Author(s) -
Angela Capolongo,
Daniël Gros
Publication year - 2020
Publication title -
economics and business letters
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.197
H-Index - 4
ISSN - 2254-4380
DOI - 10.17811/ebl.9.3.2020.216-220
Subject(s) - inflation (cosmology) , economics , fiscal policy , mainstream , monetary policy , monetary economics , fiscal space , macroeconomics , space (punctuation) , fiscal union , computer science , philosophy , physics , theology , theoretical physics , operating system
The European Central Bank is running out of instruments for addressing persistent low inflation. In this paper, we assess if a fiscal policy expansion could help the ECB reaching its target. Using ten mainstream models, we find only a modest and temporary impact of a fiscal deficit of 1% of GDP on inflation.