{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,6,11]],"date-time":"2025-06-11T05:40:04Z","timestamp":1749620404881,"version":"3.41.0"},"reference-count":56,"publisher":"Springer Science and Business Media LLC","issue":"3","license":[{"start":{"date-parts":[[2025,5,13]],"date-time":"2025-05-13T00:00:00Z","timestamp":1747094400000},"content-version":"tdm","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0"},{"start":{"date-parts":[[2025,5,13]],"date-time":"2025-05-13T00:00:00Z","timestamp":1747094400000},"content-version":"vor","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0"}],"funder":[{"name":"Universit\u00e0 Commerciale Luigi Bocconi"}],"content-domain":{"domain":["link.springer.com"],"crossmark-restriction":false},"short-container-title":["Econ Change Restruct"],"published-print":{"date-parts":[[2025,6]]},"abstract":"<jats:title>Abstract<\/jats:title>\n          <jats:p>We study the interaction between monetary and fiscal policies in the Euro Area, in particular the effect of monetary surprise shocks on real output and the price level under different fiscal sustainability regimes. We first estimate a time-varying Bohn (Q J Econ 113:949\u2013963, 1998) rule using the Schlicht (2003) method. Then, we use a nonlinear local projection model for the Euro Area (aggregate data), Germany, Italy, and Portugal conditional on the fiscal regimes obtained in the first step. We find that the effect of monetary shocks depends on the degree of fiscal sustainability of each country. In the case of a more Ricardian regime, output and prices respond to monetary tightening by contracting. Instead, in the less Ricardian regime, the response is insignificant or even positive. Our results show that fiscal solvency is important for the effectiveness of monetary policy. The results are robust to different specifications and models.<\/jats:p>","DOI":"10.1007\/s10644-025-09881-4","type":"journal-article","created":{"date-parts":[[2025,5,13]],"date-time":"2025-05-13T18:26:00Z","timestamp":1747160760000},"update-policy":"https:\/\/doi.org\/10.1007\/springer_crossmark_policy","source":"Crossref","is-referenced-by-count":0,"title":["Monetary policy surprises and fiscal sustainability: the case of the Euro Area"],"prefix":"10.1007","volume":"58","author":[{"given":"Serena","family":"Ionta","sequence":"first","affiliation":[]},{"given":"Ant\u00f3nio","family":"Afonso","sequence":"additional","affiliation":[]},{"given":"Jos\u00e9","family":"Alves","sequence":"additional","affiliation":[]}],"member":"297","published-online":{"date-parts":[[2025,5,13]]},"reference":[{"key":"9881_CR1","doi-asserted-by":"publisher","first-page":"50","DOI":"10.1016\/j.jimonfin.2017.05.003","volume":"76","author":"KA Aastveit","year":"2017","unstructured":"Aastveit KA, Natvik GJ, Sola S (2017) Economic uncertainty and the influence of monetary policy. J Int Money Financ 76:50\u201367","journal-title":"J Int Money Financ"},{"issue":"1","key":"9881_CR3","doi-asserted-by":"publisher","first-page":"19","DOI":"10.1628\/0015221053722532","volume":"61","author":"A Afonso","year":"2005","unstructured":"Afonso A (2005) Fiscal sustainability: the unpleasant European case. FinanzArchiv 61(1):19. https:\/\/doi.org\/10.1628\/0015221053722532","journal-title":"FinanzArchiv"},{"issue":"3","key":"9881_CR4","doi-asserted-by":"publisher","first-page":"313","DOI":"10.1007\/s10663-008-9066-3","volume":"35","author":"A Afonso","year":"2008","unstructured":"Afonso A (2008) Ricardian fiscal regimes in the European Union. Empirica 35(3):313\u2013334","journal-title":"Empirica"},{"key":"9881_CR6","doi-asserted-by":"publisher","first-page":"100840","DOI":"10.1016\/j.najef.2018.08.023","volume":"51","author":"A Afonso","year":"2020","unstructured":"Afonso A, Gon\u00e7alves L (2020) The policy mix in the US and EMU: Evidence from a SVAR analysis. North Am J Econ Finance 51:100840","journal-title":"North Am J Econ Finance"},{"issue":"3","key":"9881_CR7","doi-asserted-by":"publisher","first-page":"244","DOI":"10.1002\/ijfe.1582","volume":"22","author":"A Afonso","year":"2017","unstructured":"Afonso A, Jalles JT (2017) Euro Area time-varying fiscal sustainability. Int J Financ Econ 22(3):244\u2013254","journal-title":"Int J Financ Econ"},{"key":"9881_CR9","doi-asserted-by":"crossref","unstructured":"Afonso A, Coelho J (2022) Twin Deficits through the Looking Glass: Time-Varying Analysis in the Euro Area. REM Working Paper, 0211-2022","DOI":"10.2139\/ssrn.4031197"},{"key":"9881_CR10","doi-asserted-by":"crossref","unstructured":"Afonso A, Toffano P (2013) Fiscal regimes in the EU","DOI":"10.2139\/ssrn.2239160"},{"key":"9881_CR12","doi-asserted-by":"crossref","unstructured":"Afonso A, Alves J, Coelho JC (2023) Determinants of the degree of fiscal sustainability","DOI":"10.2139\/ssrn.4338242"},{"key":"9881_CR11","doi-asserted-by":"publisher","first-page":"103341","DOI":"10.1016\/j.jimonfin.2025.103341","volume":"156","author":"A Afonso","year":"2025","unstructured":"Afonso A, Alves J, Ionta S (2025) Monetary policy surprises shocks under different fiscal regimes: a panel analysis of the Euro Area. J Int Money Finance 156:103341","journal-title":"J Int Money Finance"},{"issue":"2","key":"9881_CR13","doi-asserted-by":"publisher","first-page":"1","DOI":"10.1257\/pol.4.2.1","volume":"4","author":"AJ Auerbach","year":"2012","unstructured":"Auerbach AJ, Gorodnichenko Y (2012) Measuring the output responses to fiscal policy. Am Econ J Econ Pol 4(2):1\u201327","journal-title":"Am Econ J Econ Pol"},{"key":"9881_CR14","doi-asserted-by":"crossref","unstructured":"Bianchi F, Melosi L (2022) Inflation as a fiscal limit","DOI":"10.21033\/wp-2022-37"},{"key":"9881_CR15","doi-asserted-by":"publisher","first-page":"113","DOI":"10.1016\/j.red.2017.02.011","volume":"26","author":"F Bianchi","year":"2017","unstructured":"Bianchi F, Ilut C (2017) Monetary\/fiscal policy mix and agents\u2019 beliefs. Rev Econ Dyn 26:113\u2013139","journal-title":"Rev Econ Dyn"},{"issue":"4","key":"9881_CR16","doi-asserted-by":"publisher","first-page":"1030","DOI":"10.1257\/aer.20160186","volume":"107","author":"F Bianchi","year":"2017","unstructured":"Bianchi F, Melosi L (2017) Escaping the great recession. Am Econ Rev 107(4):1030\u20131058","journal-title":"Am Econ Rev"},{"issue":"3","key":"9881_CR18","doi-asserted-by":"publisher","first-page":"949","DOI":"10.1162\/003355398555793","volume":"113","author":"H Bohn","year":"1998","unstructured":"Bohn H (1998) The behavior of US public debt and deficits. Quart J Econ 113(3):949\u2013963","journal-title":"Quart J Econ"},{"issue":"7","key":"9881_CR19","doi-asserted-by":"publisher","first-page":"1837","DOI":"10.1016\/j.jmoneco.2006.12.012","volume":"54","author":"H Bohn","year":"2007","unstructured":"Bohn H (2007) Are stationarity and cointegration restrictions really necessary for the intertemporal budget constraint? J Monet Econ 54(7):1837\u20131847","journal-title":"J Monet Econ"},{"issue":"5","key":"9881_CR20","doi-asserted-by":"publisher","first-page":"823","DOI":"10.1111\/1468-5965.00399","volume":"40","author":"M Buti","year":"2002","unstructured":"Buti M, Giudice G (2002) Maastricht\u2019s fiscal rules at ten: an assessment. JCMS J Common Mark Stud 40(5):823\u2013848","journal-title":"JCMS J Common Mark Stud"},{"issue":"5","key":"9881_CR21","doi-asserted-by":"publisher","first-page":"1221","DOI":"10.1257\/aer.91.5.1221","volume":"91","author":"MB Canzoneri","year":"2001","unstructured":"Canzoneri MB, Cumby RE, Diba BT (2001) Is the price level determined by the needs of fiscal solvency? Am Econ Rev 91(5):1221\u20131238","journal-title":"Am Econ Rev"},{"key":"9881_CR22","doi-asserted-by":"publisher","first-page":"323","DOI":"10.1086\/ma.13.4623752","volume":"13","author":"JH Cochrane","year":"1998","unstructured":"Cochrane JH (1998) A frictionless view of US inflation. NBER Macroecon Annu 13:323\u2013384","journal-title":"NBER Macroecon Annu"},{"issue":"1","key":"9881_CR23","doi-asserted-by":"publisher","first-page":"69","DOI":"10.1111\/1468-0262.00179","volume":"69","author":"JH Cochrane","year":"2001","unstructured":"Cochrane JH (2001) Long-term debt and optimal policy in the fiscal theory of the price level. Econometrica 69(1):69\u2013116","journal-title":"Econometrica"},{"issue":"4","key":"9881_CR24","doi-asserted-by":"publisher","first-page":"125","DOI":"10.1257\/jep.36.4.125","volume":"36","author":"JH Cochrane","year":"2022","unstructured":"Cochrane JH (2022b) Fiscal histories. J Econ Perspect 36(4):125\u2013146","journal-title":"J Econ Perspect"},{"key":"9881_CR25","doi-asserted-by":"publisher","DOI":"10.1515\/9780691243245","volume-title":"The fiscal theory of the price level","author":"JH Cochrane","year":"2023","unstructured":"Cochrane JH (2023) The fiscal theory of the price level. Princeton University Press, Princeton"},{"key":"9881_CR26","unstructured":"Cochrane JH (2022a) Fiscal inflation.\u00a0Forthcoming in Populism and the Fed, James Dorn Ed., Cato Institute"},{"issue":"2","key":"9881_CR27","doi-asserted-by":"publisher","first-page":"338","DOI":"10.1016\/j.jmacro.2004.07.009","volume":"28","author":"J Creel","year":"2006","unstructured":"Creel J, Le Bihan H (2006) Using structural balance data to test the fiscal theory of the price level: some international evidence. J Macroecon 28(2):338\u2013360","journal-title":"J Macroecon"},{"key":"9881_CR28","doi-asserted-by":"publisher","first-page":"247","DOI":"10.1086\/ma.21.25554956","volume":"21","author":"T Davig","year":"2006","unstructured":"Davig T, Leeper EM, Gal\u00ed J, Sims C (2006) Fluctuating macro policies and the fiscal theory [with comments and discussion]. NBER Macroecon Annu 21:247\u2013315","journal-title":"NBER Macroecon Annu"},{"key":"9881_CR30","doi-asserted-by":"publisher","first-page":"218","DOI":"10.1016\/j.jedc.2018.01.027","volume":"93","author":"C De Luigi","year":"2018","unstructured":"De Luigi C, Huber F (2018) Debt regimes and the effectiveness of monetary policy. J Econ Dyn Control 93:218\u2013238","journal-title":"J Econ Dyn Control"},{"key":"9881_CR31","unstructured":"Favero CA (2002) How do European monetary and fiscal authorities behave?. Available at SSRN 323361"},{"issue":"37","key":"9881_CR32","doi-asserted-by":"publisher","first-page":"533","DOI":"10.1111\/1468-0327.00115_1","volume":"18","author":"J Gal\u00ed","year":"2003","unstructured":"Gal\u00ed J, Perotti R (2003) Fiscal policy and monetary integration in Europe. Econ Policy 18(37):533\u2013572","journal-title":"Econ Policy"},{"issue":"3","key":"9881_CR33","doi-asserted-by":"publisher","first-page":"429","DOI":"10.1111\/j.1465-7295.1991.tb00837.x","volume":"29","author":"CS Hakkio","year":"1991","unstructured":"Hakkio CS, Rush M (1991) Is the budget deficit \u201ctoo large?\u201d Econ Inq 29(3):429\u2013445","journal-title":"Econ Inq"},{"issue":"3","key":"9881_CR34","doi-asserted-by":"publisher","first-page":"544","DOI":"10.1111\/obes.12486","volume":"84","author":"O H\u00fclsewig","year":"2022","unstructured":"H\u00fclsewig O, Rottmann H (2022) Euro area periphery countries\u2019 fiscal policy and monetary policy surprises. Oxford Bull Econ Stat 84(3):544\u2013568","journal-title":"Oxford Bull Econ Stat"},{"issue":"2","key":"9881_CR35","doi-asserted-by":"publisher","first-page":"1","DOI":"10.1257\/mac.20180090","volume":"12","author":"M Jaroci\u0144ski","year":"2020","unstructured":"Jaroci\u0144ski M, Karadi P (2020) Deconstructing monetary policy surprises\u2014the role of information shocks. Am Econ J Macroecon 12(2):1\u201343","journal-title":"Am Econ J Macroecon"},{"issue":"1","key":"9881_CR36","doi-asserted-by":"publisher","first-page":"161","DOI":"10.1257\/0002828053828518","volume":"95","author":"\u00d2 Jord\u00e0","year":"2005","unstructured":"Jord\u00e0 \u00d2 (2005) Estimation and inference of impulse responses by local projections. Am Econ Rev 95(1):161\u2013182","journal-title":"Am Econ Rev"},{"issue":"4","key":"9881_CR37","doi-asserted-by":"publisher","first-page":"1460","DOI":"10.1162\/REST_a_00143","volume":"93","author":"L Kilian","year":"2011","unstructured":"Kilian L, Kim YJ (2011) How reliable are local projection estimators of impulse responses? Rev Econ Stat 93(4):1460\u20131466","journal-title":"Rev Econ Stat"},{"issue":"3","key":"9881_CR38","doi-asserted-by":"publisher","first-page":"566","DOI":"10.1002\/jae.2427","volume":"31","author":"M Kliem","year":"2016","unstructured":"Kliem M, Kriwoluzky A, Sarferaz S (2016a) On the low-frequency relationship between public deficits and inflation. J Appl Economet 31(3):566\u2013583","journal-title":"J Appl Economet"},{"key":"9881_CR39","doi-asserted-by":"publisher","first-page":"158","DOI":"10.1016\/j.euroecorev.2016.02.023","volume":"88","author":"M Kliem","year":"2016","unstructured":"Kliem M, Kriwoluzky A, Sarferaz S (2016b) Monetary\u2013fiscal policy interaction and fiscal inflation: a tale of three countries. Eur Econ Rev 88:158\u2013184","journal-title":"Eur Econ Rev"},{"key":"9881_CR40","doi-asserted-by":"crossref","unstructured":"Kloosterman R, Bonam D, van der Veer K (2022) The effects of monetary policy across fiscal regimes","DOI":"10.2139\/ssrn.4300338"},{"issue":"1","key":"9881_CR41","doi-asserted-by":"publisher","first-page":"129","DOI":"10.1016\/0304-3932(91)90007-B","volume":"27","author":"EM Leeper","year":"1991","unstructured":"Leeper EM (1991) Equilibria under \u2018active\u2019 and \u2018passive\u2019 monetary and fiscal policies. J Monet Econ 27(1):129\u2013147","journal-title":"J Monet Econ"},{"key":"9881_CR42","doi-asserted-by":"crossref","unstructured":"Leeper EM, Leith C (2016) Understanding inflation as a joint monetary\u2013fiscal phenomenon. In: Handbook of macroeconomics, vol 2. Elsevier, pp 2305\u20132415","DOI":"10.1016\/bs.hesmac.2016.03.012"},{"issue":"5","key":"9881_CR43","first-page":"1005","volume":"70","author":"RE Lucas","year":"1980","unstructured":"Lucas RE (1980) Two illustrations of the quantity theory of money. Am Econ Rev 70(5):1005\u20131014","journal-title":"Am Econ Rev"},{"key":"9881_CR44","unstructured":"Melitz J (2000) Some cross-country evidence about fiscal policy behavior and consequences for EMU. Department of Economics, Fraser of Allander Institute"},{"key":"9881_CR45","doi-asserted-by":"crossref","unstructured":"Muscatelli VA, Tirelli P, Trecroci C (2004) 10 Monetary and fiscal policy interactions over the cycle: some empirical evidence. Monet Policy Fisc Polic Labour Mark, 256","DOI":"10.1017\/CBO9780511492389.011"},{"key":"9881_CR47","doi-asserted-by":"publisher","first-page":"411","DOI":"10.1007\/s10663-019-09431-y","volume":"47","author":"N Panjer","year":"2020","unstructured":"Panjer N, de Haan L, Jacobs JP (2020) Is fiscal policy in the euro area Ricardian? Empirica 47:411\u2013429","journal-title":"Empirica"},{"issue":"5","key":"9881_CR48","doi-asserted-by":"publisher","first-page":"800","DOI":"10.1016\/j.jpolmod.2014.07.003","volume":"36","author":"J Paredes","year":"2014","unstructured":"Paredes J, Pedregal DJ, P\u00e9rez JJ (2014) Fiscal policy analysis in the Euro Area: expanding the toolkit. J Policy Model 36(5):800\u2013823","journal-title":"J Policy Model"},{"issue":"4","key":"9881_CR49","doi-asserted-by":"publisher","first-page":"409","DOI":"10.1080\/07350015.1995.10524615","volume":"13","author":"CE Quintos","year":"1995","unstructured":"Quintos CE (1995) Sustainability of the deficit process with structural shifts. J Bus Econ Stat 13(4):409\u2013417","journal-title":"J Bus Econ Stat"},{"key":"9881_CR50","doi-asserted-by":"publisher","first-page":"71","DOI":"10.1016\/bs.hesmac.2016.03.003","volume":"2","author":"VA Ramey","year":"2016","unstructured":"Ramey VA (2016) Macroeconomic shocks and their propagation. Handb Macroecon 2:71\u2013162","journal-title":"Handb Macroecon"},{"issue":"2","key":"9881_CR51","doi-asserted-by":"publisher","first-page":"850","DOI":"10.1086\/696277","volume":"126","author":"VA Ramey","year":"2018","unstructured":"Ramey VA, Zubairy S (2018) Government spending multipliers in good times and in bad: evidence from US historical data. J Polit Econ 126(2):850\u2013901","journal-title":"J Polit Econ"},{"key":"9881_CR52","doi-asserted-by":"publisher","first-page":"104328","DOI":"10.1016\/j.euroecorev.2022.104328","volume":"151","author":"L Reichlin","year":"2023","unstructured":"Reichlin L, Ricco G, Tarb\u00e9 M (2023) Monetary\u2013fiscal crosswinds in the European Monetary Union. Eur Econ Rev 151:104328","journal-title":"Eur Econ Rev"},{"issue":"1","key":"9881_CR53","doi-asserted-by":"publisher","first-page":"109","DOI":"10.1257\/aer.101.1.109","volume":"101","author":"TJ Sargent","year":"2011","unstructured":"Sargent TJ, Surico P (2011) Two illustrations of the quantity theory of money: breakdowns and revivals. Am Econ Rev 101(1):109\u2013128","journal-title":"Am Econ Rev"},{"issue":"3","key":"9881_CR54","first-page":"1","volume":"5","author":"TJ Sargent","year":"1981","unstructured":"Sargent TJ, Wallace N (1981) Some unpleasant monetarist arithmetic. Fed Reserve Bank Minneap Q Rev 5(3):1\u201317","journal-title":"Fed Reserve Bank Minneap Q Rev"},{"key":"9881_CR55","unstructured":"Schlicht E (2003) Estimating time-varying coefficients with the VC program (No. 2003\u20136). Munich Discussion Paper"},{"key":"9881_CR56","doi-asserted-by":"publisher","first-page":"205","DOI":"10.1007\/s10633-004-1076-1","volume":"31","author":"W Semmler","year":"2004","unstructured":"Semmler W, Zhang W (2004) Monetary and fiscal policy interactions in the Euro Area. Empirica 31:205\u2013227","journal-title":"Empirica"},{"key":"9881_CR57","doi-asserted-by":"publisher","first-page":"381","DOI":"10.1007\/BF01215378","volume":"4","author":"CA Sims","year":"1994","unstructured":"Sims CA (1994) A simple model for the study of the determination of the price level and the interaction of monetary and fiscal policy. Econ Theor 4:381\u2013399","journal-title":"Econ Theor"},{"issue":"1","key":"9881_CR58","doi-asserted-by":"publisher","first-page":"48","DOI":"10.1016\/j.euroecorev.2010.11.010","volume":"55","author":"CA Sims","year":"2011","unstructured":"Sims CA (2011) Stepping on a rake: the role of fiscal policy in the inflation of the 1970s. Eur Econ Rev 55(1):48\u201356","journal-title":"Eur Econ Rev"},{"issue":"5","key":"9881_CR59","doi-asserted-by":"publisher","first-page":"1123","DOI":"10.1162\/154247603770383415","volume":"1","author":"F Smets","year":"2003","unstructured":"Smets F, Wouters R (2003) An estimated dynamic stochastic general equilibrium model of the Euro Area. J Eur Econ Assoc 1(5):1123\u20131175","journal-title":"J Eur Econ Assoc"},{"issue":"4","key":"9881_CR60","doi-asserted-by":"publisher","first-page":"43","DOI":"10.1257\/mac.20150016","volume":"8","author":"S Tenreyro","year":"2016","unstructured":"Tenreyro S, Thwaites G (2016) Pushing on a string: US monetary policy is less powerful in recessions. Am Econ J Macroecon 8(4):43\u201374","journal-title":"Am Econ J Macroecon"},{"key":"9881_CR61","doi-asserted-by":"publisher","first-page":"345","DOI":"10.1007\/BF01215377","volume":"4","author":"M Woodford","year":"1994","unstructured":"Woodford M (1994) Monetary policy and price level determinacy in a cash-in-advance economy. Econ Theor 4:345\u2013380","journal-title":"Econ Theor"},{"key":"9881_CR62","doi-asserted-by":"crossref","unstructured":"Woodford M (1995) Price-level determinacy without control of a monetary aggregate. In: Carnegie-Rochester conference series on public policy, vol 43. North-Holland, pp 1\u201346","DOI":"10.1016\/0167-2231(95)90033-0"}],"container-title":["Economic Change and Restructuring"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/link.springer.com\/content\/pdf\/10.1007\/s10644-025-09881-4.pdf","content-type":"application\/pdf","content-version":"vor","intended-application":"text-mining"},{"URL":"https:\/\/link.springer.com\/article\/10.1007\/s10644-025-09881-4\/fulltext.html","content-type":"text\/html","content-version":"vor","intended-application":"text-mining"},{"URL":"https:\/\/link.springer.com\/content\/pdf\/10.1007\/s10644-025-09881-4.pdf","content-type":"application\/pdf","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,6,11]],"date-time":"2025-06-11T05:03:44Z","timestamp":1749618224000},"score":1,"resource":{"primary":{"URL":"https:\/\/link.springer.com\/10.1007\/s10644-025-09881-4"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2025,5,13]]},"references-count":56,"journal-issue":{"issue":"3","published-print":{"date-parts":[[2025,6]]}},"alternative-id":["9881"],"URL":"https:\/\/doi.org\/10.1007\/s10644-025-09881-4","relation":{},"ISSN":["1573-9414","1574-0277"],"issn-type":[{"type":"print","value":"1573-9414"},{"type":"electronic","value":"1574-0277"}],"subject":[],"published":{"date-parts":[[2025,5,13]]},"assertion":[{"value":"10 October 2024","order":1,"name":"received","label":"Received","group":{"name":"ArticleHistory","label":"Article History"}},{"value":"8 April 2025","order":2,"name":"accepted","label":"Accepted","group":{"name":"ArticleHistory","label":"Article History"}},{"value":"13 May 2025","order":3,"name":"first_online","label":"First Online","group":{"name":"ArticleHistory","label":"Article History"}}],"article-number":"42"}}