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The policy mix in the US and EMU: evidence from a SVAR analysis
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Resumo(s)
We use a SVAR approach to the effects of fiscal and monetary policies, as well as their interactions
(policy mix) for the US and the Euro Area (EMU). Overall, our results show that these two
cases are different from each other. First, while in the case of the US there is evidence of
Keynesian monetary policy, the same is not true in the case of the EMU. Second, considering the
effects of the global economic and financial crisis, there is evidence of non-Keynesian fiscal policy
in the case of the EMU (expansionary fiscal consolidation), while it does not hold in the case of
the US. Third, there is evidence supporting the traditional inverse relationship between monetary
policy interest rates and inflation in the case of the US, whereas in the case of the EMU there is a
price puzzle (frequent in SVAR studies). Fourth, the baseline model seems to be robust in the case
of the US, when considering the effects of the economic and financial crisis 2007–2009, while the
opposite holds in the case of the EMU. However, in both cases, the policies seem to act as
complements. Another similarity appears when analysing the relationship between public
spending and taxation, where there is evidence supporting a fiscal retrenchment.
Descrição
Palavras-chave
Fiscal Policy Monetary Policy Crisis Unconventional Monetary Policy US EMU
Contexto Educativo
Citação
Afonso, António and Luis Gonçalves. (2020)."The policy mix in the US and EMU: evidence from a SVAR analysis" .The North American Journal of Economics and Finance, No. 51: 100840.
Editora
Elsevier