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Policy Contribution

The ECB is running out of policy space

Can fiscal policy help?

16 December 2019

The ECB is running out of policy space

Can fiscal policy help?

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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.

An earlier version was published by VoxEU.


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The ECB is running out of policy space Can fiscal policy help?
Download Publication

181 Downloads