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.

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Metadaten
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 series (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):License LogoDeutsches Urheberrecht