IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-00986574.html
   My bibliography  Save this paper

The policy-mix in the Euro Area : The Role of Financial Stability

Author

Listed:
  • Claudiu Albulescu

    () (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers)

  • Cornel Oros

    () (Axe 2 : « Marchés, Cultures de consommation, Autonomie et Migrations » (MSHS Poitiers) - MSHS - Unite mixte de service maison des sciences de l'homme et de la société de Poitiers - Université de Poitiers - CNRS - Centre National de la Recherche Scientifique, CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers, LEO - Laboratoire d'économie d'Orleans - UO - Université d'Orléans - Université de Tours - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper analyses the impact of monetary and fiscal policies' interaction on the financial stability of the eurozone. Based on the construction of a financial stability index for the entire euro area, we assess the impact in terms of the stability of different configurations of policy-mix using a static Keynesian model in a closed monetary union. Mainly following the nature of fiscal spillovers, we show that fiscal coordination may be useful to improve the quality of the European Monetary Union financial stabilisation. The explicit consideration by the European Central Bank of the aggregate euro area financial stability as one of its macroeconomic objectives makes the non-cooperative game efficient. This configuration allows for a better macroeconomic and financial stabilisation at the aggregate level, which also has a positive effect at an individual level.

Suggested Citation

  • Claudiu Albulescu & Cornel Oros, 2014. "The policy-mix in the Euro Area : The Role of Financial Stability," Post-Print hal-00986574, HAL.
  • Handle: RePEc:hal:journl:hal-00986574
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00986574
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brousseau, Vincent & Detken, Carsten, 2001. "Monetary policy and fears of financial instability," Working Paper Series 0089, European Central Bank.
    2. Roel M. W. J. Beetsma & Xavier Debrun & Franc Klaassen, 2001. "Is Fiscal Policy Coordination in EMU Desirable?," IMF Working Papers 01/178, International Monetary Fund.
    3. Beetsma, Roel M. W. J. & Bovenberg, A. Lans, 1999. "Does monetary unification lead to excessive debt accumulation?," Journal of Public Economics, Elsevier, vol. 74(3), pages 299-325, December.
    4. Ferré, Montserrat, 2008. "Fiscal policy coordination in the EMU," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 221-235.
    5. Jürgen von Hagen & Susanne Mundschenk, 2003. "Fiscal and monetary policy coordination in EMU," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 8(4), pages 279-295.
    6. Dixit, Avinash & Lambertini, Luisa, 2001. "Monetary-fiscal policy interactions and commitment versus discretion in a monetary union," European Economic Review, Elsevier, vol. 45(4-6), pages 977-987, May.
    7. Oros, Cornel, 2012. "What could happen in a Monetary Union? The Perspective of Informational Asymmetry," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 27, pages 633-653.
    8. Patrick Villieu, 2003. "Pacte de stabilité, crédibilité du policy mix et coordination des politiques budgétaires en union monétaire," Revue économique, Presses de Sciences-Po, vol. 54(1), pages 25-46.
    9. Engwerda, Jacob C. & van Aarle, Bas & Plasmans, Joseph E. J., 2002. "Cooperative and non-cooperative fiscal stabilization policies in the EMU," Journal of Economic Dynamics and Control, Elsevier, vol. 26(3), pages 451-481, March.
    10. Daniel Laskar, 2003. "Policy-mix : le besoin de coordination des politiques budgétaires entre pays est-il accru en union monétaire ?," Recherches économiques de Louvain, De Boeck Université, vol. 69(3), pages 267-292.
    11. Claudiu Tiberiu ALBULESCU, 2012. "Financial stability, monetary policy and budgetary coordination in EMU," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(8(573)), pages 85-96, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    economic policy; financial stability; fiscal coordination; euro area;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-00986574. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.