caa a22 4500 605534365 CHVBK 20210128100842.0 cr unu---uuuuu 210128e20150801xx s 000 0 eng 10.1007/s10663-014-9260-4 doi (NATIONALLICENCE)springer-10.1007/s10663-014-9260-4 Monetary policy and sovereign debt: Does the ECB take the eurozone's fiscal risks into account? [Elektronische Daten] [Andrew Hughes Hallett, John Lewis] In the standard Taylor rule, fiscal variables are absent and the central bank is assumed to respond in the same way to a given inflation-output gap outlook regardless of the stance of fiscal policy or the outlook for government debt. This paper puts that assumption to the test. Estimating Taylor rules for the ECB using real time data, we find that there is no direct response to the usual instrument of fiscal policy, the cyclical adjusted primary balance. But there is a clear response to the level of debt. Monetary policy tightens by 25 basis points for every 2.5pp rise in the expected debt to GDP ratio. With ex-post data, we see the opposite: the ECB appears, unfairly since they didn't have the data, to have acted as if it loosened in periods with a forecasted debt build-up (i.e. in recessions), but tightened in response to past fiscal excesses. Springer Science+Business Media New York, 2014 Policy co-ordination nationallicence Fiscal policy nationallicence Monetary policy nationallicence Real time data nationallicence Hughes Hallett Andrew School of Public Policy, George Mason University, George Mason School of Public Policy, 3350 N. Fairfax Drive, MS 3B1, 22201, Arlington, VA, USA aut Lewis John Economics and Research Department, De Nederlandsche Bank, PO Box 98, 1000AB, Amsterdam, The Netherlands aut Empirica Springer US; http://www.springer-ny.com 42/3(2015-08-01), 499-520 0340-8744 42:3<499 2015 42 10663 https://doi.org/10.1007/s10663-014-9260-4 text/html Onlinezugriff via DOI BK010053 XK010053 XK010000 Metadata rights reserved Springer special CC-BY-NC licence nationallicence 1 research-article jats NATIONALLICENCE NATIONALLICENCE NL-springer NATIONALLICENCE 856 40 https://doi.org/10.1007/s10663-014-9260-4 text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Hughes Hallett Andrew School of Public Policy, George Mason University, George Mason School of Public Policy, 3350 N. Fairfax Drive, MS 3B1, 22201, Arlington, VA, USA aut NATIONALLICENCE 700 1- Lewis John Economics and Research Department, De Nederlandsche Bank, PO Box 98, 1000AB, Amsterdam, The Netherlands aut NATIONALLICENCE 773 0- Empirica Springer US; http://www.springer-ny.com 42/3(2015-08-01), 499-520 0340-8744 42:3<499 2015 42 10663