Search Options
Home Media Explainers Research & Publications Statistics Monetary Policy The €uro Payments & Markets Careers
Sort by

Fiscal policy during and after the crisis

Thursday, 10 and Friday, 11 November 2016
ECB main building, Room C2.01, Frankfurt am Main


Thursday, 10 November 2016

* indicates the presenter

Registration and coffee

Welcome remarks

Policy panel 1 The current fiscal governance framework

Chair: Peter Praet, European Central Bank

Alberto Alesina, Harvard University
Alexander Stubb, former Finnish Prime Minister and Minister of Finance
Clemens Fuest, University of Munich
Maria João Rodrigues, Member of European Parliament, S&D Vice President in charge of Economic and Social Policies

Coffee break

Session 1Optimal policy and sovereign default

Chair: Günter Coenen, European Central Bank

Paper 1A Model of the Twin Ds: Optimal Default and Devaluation

Stephanie Schmitt-Grohé*, Seunghoon Na and Martin Uribe, Columbia University;
Vivian Zhanwei Yue, Emory University

Discussant: Huixin Bi, Federal Reserve Bank of Kansas City


Paper 2The Optimal Composition of Government Spending in a Deep Recession

Hafedh Bouakez*, HEC Montreal;
Michel Guillard, Université Evry Val d'Essonne;
Jordan Roulleau-Pasdeloup, HEC Lausanne

Discussant: Lena Boneva, Bank of England

Session 2Fiscal stabilisation policy

Chair: Francesco Drudi, European Central Bank


Paper 3Optimal Automatic Stabilizers

Ricardo Reis*, London School of Economics; Alisdair McKay, Boston University

Discussant: Keith Kuester, University of Bonn


Paper 4Determinants and Effects of Fiscal Stabilization: New Evidence from Time-Varying Estimates

Davide Furceri* and João Tovar Jalles, International Monetary Fund

Discussant: Ryan Banerjee, Bank for International Settlements

Coffee break

Session 3Risk sharing

Chair: Johannes Lindner, European Central Bank

Paper 5The Role of Fiscal Transfers in Smoothing Regional Shocks: Evidence from Existing Federations

Tigran Poghosyan*, Abdelhak Senhadji and Carlo Cottarelli, International Monetary Fund

Discussant: Massimo Giuliodori, University of Amsterdam


Paper 6An Unemployment Insurance Scheme for the Euro Area? A Comparison of Different Alternatives using Micro Data

Mathias Dolls*, Centre for European Economic Research;
Clemens Fuest, University of Munich;
Dirk Neumann, Université catholique de Louvain;
Andreas Peichl, University of Mannheim

Discussant: Francesca Carta, Banca d’Italia

Conference Dinner

Keynote speech
Mario Monti, Senator, former Prime Minister of Italy and EU Commissioner

Friday, 11 November 2016

* indicates the presenter



Session 4Fiscal consolidations

Chair: Frank Smets, European Central Bank


Paper 7Is it the "How" or the "When" that Matters in Fiscal Adjustments?

Carlo Favero* and Francesco Giavazzi, Bocconi University;
Gualtiero Azzalini, NYU Stern School of Business;
Alberto Alesina and Armando Miano, Harvard University

Discussant: Gernot Müller, University of Tübingen


Paper 8When Fiscal Consolidation Meets Private Deleveraging

Carlos Thomas* and Óscar Arce, Banco de España; Javier Andrés, University of Valencia

Discussant: Massimiliano Pisani, Banca d’Italia

Coffee break

Policy panel 2Mechanisms of public and private risk-sharing in monetary union

Chair: Vítor Constâncio, Vice-President of the European Central Bank

Nicolas Véron, Bruegel and Peterson Institute for International Economics
Peter Grasmann, European Commission
Erik F. Nielsen, Unicredit
Marco Pagano, University of Naples Federico II and ESRB Advisory Scientific Committee


Session 5: Fiscal stance

Chair: Christophe Kamps, European Central Bank

Paper 9Measuring and assessing the fiscal stance in the euro area: Methodological issues

Eloise Orseau* and Matteo Salto, European Commission

Discussant: Krzysztof Bankowski, European Central Bank


Paper 10Fiscal Policy Changes and Aggregate Demand in the U.S. Before, During and Following the Great Recession

William B. Peterman*, David Cashin, Jamie Lenney and Byron Lutz, Federal Reserve Board

Discussant: António Afonso, University of Lisbon


Paper 11Fiscal Spillovers in the Euro Area: Sign, Size and Determinants

Josef Hollmayr*, Deutsche Bundesbank; Georgios Georgiadis, European Central Bank

Discussant: Roel Beetsma, University of Amsterdam and European Fiscal Board

End of conference
Policy panel summaries

Fiscal policy during and after the crisis

In view of the crisis experienced in Europe over the past years, the conference sought to explore the role fiscal policy plays in business cycle stabilisation as well as in risk-sharing in a monetary union. The two policy panels of the conference – chaired by Peter Praet (member of the Executive Board), and Vítor Constâncio (Vice-President), respectively – were devoted to (i) “The current fiscal governance framework”; and (ii) “Mechanisms of public and private risk-sharing in a monetary union”. Discussions underlined the importance of cooperation in European policymaking, which should be seen as a positive-sum rather than a zero-sum game. The policy panels were accompanied by academic sessions that focused on various aspects of fiscal policy, including the optimal use of automatic stabilisers, the role of fiscal transfers in smoothing regional shocks, the composition and timing of fiscal adjustments and the concept and measurement of the fiscal stance for the euro area and the United States.

The current fiscal governance framework

The participants on the first policy panel agreed that the reformed fiscal framework was not fully achieving its objectives. They pointed out that the complexity of the rules had unduly increased, implementation was insufficient and the surveillance process was too often subject to political influence. Participants argued that instead of multiplying rules and controls, greater trust among Member States needed to be rebuilt, and measures to enhance the democratic legitimacy of the framework should also be considered. As assigning more powers to a central institution might pose challenges in terms of legitimacy and political feasibility in the short to medium term, one panellist made the case for more national responsibility and an enhancement of the role of markets as a disciplining device. Another participant stressed that the low growth potential and sluggish demand in the European Union accentuated the necessity of tackling the existing investment gap. However, there were diverging views on the exclusion of public investment from the definition of the deficit in the fiscal rules (known as the “golden rule”). Doubts were expressed as to the need for further investment in conventional infrastructure, but the need for more investment to support the digital economy and the ongoing energy transformation was also underlined.

Mechanisms of public and private risk-sharing in a monetary union

The second panel focused on the different risk-sharing channels, such as capital markets, credit via the banking system or public sector channels of risk-sharing. In general, it was stressed that significantly more shocks were smoothed via these risk-sharing channels in the United States than in Europe. There was also agreement that private sector risk-sharing via capital and credit markets was a much more important source of shock absorption than public sector risk-sharing in mature federations such as the United States. This held an important lesson for European initiatives for deepening Economic and Monetary Union. As regards private channels of risk-sharing, while participants agreed that the Capital Markets Union was far from being completed, the initiative was seen as an important step towards integrating and developing EU capital markets further. However, many crucial policy issues, such as taxation for example, were by and large subject to national competences which limited the Commission’s scope for further action. Participants expressed the view that Banking Union had increased the resilience of the euro area but noted that its architecture was still incomplete. Some panellists pointed out that the current environment was challenging for banks’ business models, but acknowledged that banks had to take action themselves, for example by reducing operating costs and being open to consolidation in the sector. While not all the discussants agreed on the precise magnitude and interplay of the sovereign bank feedback loop, all participants shared the idea that sovereign exposures should be reduced, even if home bias in public debt held by banks was at lower than pre-crisis levels.

General information

About the conference

Transfers: Participants are requested to arrange their own transfers from and to the airport, unless indicated otherwise

Dinner venue: Goldmund im Literaturhaus, Frankfurt am Main
Schöne Aussicht 2, 60311 Frankfurt am Main
+49 (0) 69 210 85 985, Email:

Please note that this programme may be subject to change without notice.

Contact details

Conference email address:

Call for Papers information

Submission deadline: 31 July 2016

The role of fiscal policy for business-cycle stabilisation and for risk sharing in a monetary union is a matter of interest for both policymakers and academics, especially in view of the financial crisis in Europe of past years. The aim of the conference is to explore this role, accompanied by policy discussions on completing Europe’s Economic and Monetary Union (EMU) with a focus on improving the EMU fiscal policy framework.

The conference will be hosted by the European Central Bank, in Frankfurt am Main on 10-11 November 2016.


Theoretical and empirical macroeconomic papers on the following topics are particularly welcome:

  1. The role of fiscal policy as a stabilising tool, with a particular focus on fiscal policy stabilisation in monetary unions
  2. Public risk-sharing mechanisms within monetary unions, including links with private risk sharing
  3. The aggregate euro area fiscal stance, the national and international transmission of fiscal shocks
  4. Tools to assess the long-term sustainability of public finances, measures of fiscal limits and fiscal space
  5. The quality of fiscal policies, e.g. the optimal composition of public expenditure and tax policies
  6. Monetary and fiscal determinants of inflation
  7. The inter-linkages between fiscal policy and the financial sector

The scope of the conference can, however, be considered to be wider than the themes listed above, and submissions on other related topics are also encouraged. It is planned that the conference material will be published on the ECB’s website.

The conference will include invited speaker presentations by Carlo Favero (Bocconi University), Timothy Kehoe (University of Minnesota), and Stephanie Schmitt-Grohé (Columbia University). Members of the ECB’s Executive Board will also participate.


Please submit papers in PDF format to by 31 July 2016. Authors will be notified whether their papers have been accepted by 31 August 2016.


Travel and accommodation expenses of the presenters of accepted papers and discussants will be covered by the ECB. Participants from central banks and other official institutions will be expected to cover their own expenses.

Conference organisers

  • Jacopo Cimadomo
  • Sebastian Schmidt
  • Florian Walch