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This paper examines the distributional implications of ECB monetary policy on income inequality on a panel of 10 Euro area countries between 2000 and 2015. In contrast with the literature, we investigate different transmission channels and introduce several specifications (different monetary policy instruments, different indicators of income inequality, different data sources, parsimonious and larger models, shocks on monetary policy per se, on long‐term rates and on inflation rates) in a panel VAR setting to highlight the robustness of results. Results suggest that: (i) the distributional effects of ECB's monetary policy have been modest and (ii) mainly driven in times of conventional monetary policy measures, especially in countries with a high level of income inequality, while, overall, (iii) standard and non‐standard monetary policies do not significantly differ in terms of impact and (iv) baseline results persist when redistributive public policies are introduced. We further document that our results are more likely to be channelled via income composition effects. [ABSTRACT FROM AUTHOR]

Using descriptive evidence, this paper contributes to the debate on French public finances’ consolidation by examining the long-term sustainability of France’s fiscal position. We trace the historical trends of government’s tax receipts and expenditures. We illustrate that while the level of public expenditure in France is larger than in the Euro Area, its trend is comparable to its neighbours. French net debt is comparable to Eurozone’s while French net wealth remains positive. However, the French tax system is not progressive with only 6% of compulsory levies raised that way, and too complex. The paper then acknowledges the efficient debt management of French authorities. As a conclusion, we see no risk of future unsustainability linked to the nature or the level of current French public finances.

EMU countries have engaged in fiscal consolidation since 2011. This strategy has proven to be costly in terms of GDP. This cost has been amplified by the fact that fiscal multipliers are high in time of crisis, as recently stressed by the literature. Within this context, we wonder whether there is an alternative strategy aiming at bringing back the debt ratio to 60% of GDP in 2032, meanwhile lowering output losses. To this end, we report simulations realized from a simple model describing the Eurozone and the timing for consolidation. Based on a pragmatic view of the fiscal compact, we find an alternative path for consolidation which achieves a 60% threshold for public debt over the next 20 years in most euro area countries.

This article explores the role of banking fragility for the relationship between private credit and economic growth and bridges two literatures, one on the link between credit and economic growth and the other on the effects of banking fragility on credit dynamics. We consider two types of banking fragility on both the asset and liability sides: nonperforming loans and the ratio of bank capital to assets. Using a standard growth model framework and a dynamic generalized method of moment panel estimator on data for European Union countries, we find that banking fragility has a negative effect on economic growth. A consequence of considering banking fragility is that credit appears to have a positive effect on economic growth only when banking fragility is relatively low. [ABSTRACT FROM AUTHOR]