Source Themes

The Effects of Government Spending in the Eurozone

Using a newly assembled rich dataset at the regional level, this paper provides novel empirical evidence on the fiscal transmission mechanism in the Eurozone. Our baseline estimates reveal a government spending relative output multiplier around 2, an …

Monetary Policy and the Wage Inflation-Unemployment Tradeoff

The recent weakening of the inflation-unemployment tradeoff has instigated a debate on whether the New Keynesian framework has outlived its usefulness. Understanding the source of that structural change is crucial for proper monetary policy …

Gains from Commitment: The Case for Pegging the Exchange Rate

What is the impact of the exchange rate regime on inflation and economic activity? This paper argues that there are substantial benefits to move towards a fixed exchange rate regime. First, we propose a calibrated small open economy model that …

The Political Costs of Austerity

Anti-establishment and Eurosceptic parties have gained significant support since the Great Recession and the subsequent European debt crisis. Higher vote shares for these parties have increased partisan conflict, led to more fragmented parliaments …

Adopting the Euro: A Synthetic Control Approach

We investigate whether joining the European Monetary Union and losing the ability to set monetary policy affected the economic growth of Eurozone countries. We use the synthetic control approach to create a counterfactual scenario for how each …

Who should you vote for? Empirical evidence from Portuguese local governments

The economic literature considers voters quasi-rational agents that care about maximizing their individual welfare when deciding on who to vote for. Voters believe that, once a politician is elected, his or her characteristics will affect policy …