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Monetary/fiscal policy regimes in post-war Europe

Othman Bouabdallah et al.

Macroeconomic Dynamics2026https://doi.org/10.1017/s1365100525100837article
AJG 2ABDC A
Weight
0.50

Abstract

We analyse the monetary-fiscal policy mix in post-war Europe, focusing on France and Italy, to trace the historical dynamics of debt and inflation. Using a Markov-switching DSGE model, we identify distinct policy regimes: a Passive Monetary-Active Fiscal (PM/AF) regime before the late 1980s/early 1990s, an Active Monetary-Passive Fiscal (AM/PF) regime associated with central bank independence and EMU convergence, and a third regime marked by the ELB and active fiscal measures aimed at recovery. Simulations reveal that the PM/AF regime in France led to price volatility but stabilised debt, while AM/PF curbed inflation at the cost of rising debt. In contrast, Italy’s procyclical fiscal policy in downturns exacerbated imbalances, aggregate volatility, and low growth. We further assess the implications of policy credibility and uncertainty.

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https://doi.org/https://doi.org/10.1017/s1365100525100837

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@article{othman2026,
  title        = {{Monetary/fiscal policy regimes in post-war Europe}},
  author       = {Othman Bouabdallah et al.},
  journal      = {Macroeconomic Dynamics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1017/s1365100525100837},
}

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0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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