Working Papers
NEW: Fiscal Policy and Inflation in the Euro Area, 2024, with Guido Ascari, Dennis Bonam and Lorenzo Mori
We investigate the relationship between fiscal policy and inflation dynamics in the Euro Area, with a focus on the post-pandemic inflation surge. Using a BVAR identified via sign restrictions, we disentangle the effects of various demand- and supply-side shocks, including fiscal policy, on inflation. First, while both positive demand and adverse supply shocks contributed to the inflation surge, demand shocks were relatively more important. Second, fiscal stimulus played a substantial and progressively increasing role, particularly in influencing domestic-based measures of inflation. Finally, the relative impact of fiscal shocks on inflation dynamics varies across (selected) Euro Area countries.
NEW version: Uncertainty shocks and the monetary-macroprudential policy mix, 2022, with Valeriu Nalban (ERMAS Association Prize best young econ paper (1/2), under review)
How should policymakers respond to uncertainty shocks? To explore and compare the macroeconomic effects of uncertainty shocks stemming from various conventional structural shocks, we develop a New Keynesian model incorporating borrowing constraints and time-varying volatility, featuring a monetary-macroprudential policy mix. Our findings indicate that the nature of uncertainty - whether demand, supply, or financial - significantly influences shock propagation, macroeconomic outcomes, and appropriate policy responses. Financial uncertainty, in particular, exerts more pronounced effects, underscoring the complementarity between interest rate adjustments and macroprudential policy measures. While both supply-side and demand-side uncertainty shocks present trade-offs between price stability and financial stability, their overall quantitative impact remains modest. Simulations of financial turmoil reveal that heightened financial uncertainty amplifies the adverse macroeconomic effects triggered by a first-moment financial shock. Moreover, our results demonstrate how the impacts of uncertainty shocks vary across different monetary-macroprudential policy frameworks, as determined by the calibration of the two reaction functions, offering novel insights for the policymakers.
Financial disruptions and heightened uncertainty: a case for timely policy action, 2020, with Valeriu Nalban
Estimating a real-time business conditions indicator for Romania, 2016, with Irina Stanciu and Andrei Tanase
Policy analyses
ECB Occasional Paper Series
Review of Macroeconomic Modelling in the Eurosystem: Current Practices and Scope for Improvement, 2021 (as part of the Eurosystem Modelling Work stream)
The natural rate of interest: estimates, drivers, and challenges to monetary policy, 2018 (as part of the WGEM Team on the Natural Rate of Interest)
DNB Bulletin
Work in progress
Financial disruptions and the monetary-macroprudential policy mix, with Matthijs Katz