Exit strategies
- We study alternative scenarios for exiting the post-crisis fiscal and monetary accommodation using a macromodel where banks choose their capital structure and are subject to runs. Under a Taylor rule, the post-crisis interest rate hits the zero lower bound (ZLB) and remains there for several years. In that condition, pre-announced and fast fiscal consolidations dominate - based on output and inflation performance and bank stability - alternative strategies incorporating various degrees of gradualism and surprise. We also examine an alternative monetary strategy in which the interest rate does not reach the ZLB; the benefits from fiscal consolidation persist, but are more nuanced.
| Author: | Ignazio AngeloniGND, Ester FaiaGND, Roland Winkler |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-341788 |
| URL: | http://ssrn.com/abstract=2437326 |
| DOI: | https://doi.org/10.2139/ssrn.2437326 |
| Parent Title (German): | SAFE working paper series ; No. 50 |
| Series (Serial Number): | SAFE working paper (50) |
| Publisher: | SAFE |
| Place of publication: | Frankfurt am Main |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2014 |
| Year of first Publication: | 2014 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2014/06/17 |
| Tag: | bank runs; debt consolidation; exit strategies; monetary policy; fiscal multipliers; fiscal policy |
| Issue: | This draft: April 2014 |
| Page Number: | 51 |
| Note: | First draft: August 2010. This draft: April 2014. |
| HeBIS-PPN: | 348924917 |
| Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF) | |
| Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
| Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE) | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Deutsches Urheberrecht |
