On the impact of the global financial crisis on the euro area

Xiaoli He, Jan Jacobs, Gerard Kuper, Jenny Ligthart

Research output: Working paperAcademic

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This paper analyses the impact of the Global Financial Crisis on the Euro area utilizing a simple dynamic macroeconomic model with interaction between monetary policy and fiscal policy. The model consists of an IS curve, a Phillips curve, a term structure relation, a debt accumulation equation and a Taylor monetary policy rule supplemented with a Zero Lower Bound, and a fiscal policy rule. The model is alibrated/estimated for EU-16 countries for the period 1980Q1-2009Q4. The impact of the Global Financial Crisis is studied by means of impulse responses following a combined, prolonged aggregate demand and public debt shock. The simulation mimicking the GFC turns out to work fairly well. However, the required size of the shock is quite large.
Original languageEnglish
Place of PublicationGroningen
PublisherUniversity of Groningen, SOM research school
Number of pages33
Publication statusPublished - 2013

Publication series

NameSOM Research Reports
PublisherUniversity of Groningen, SOM Research School


  • New Neoclassical Synthesis model
  • Zero Lower Bound
  • fiscal policy
  • monetary policy
  • euro area
  • Global Financial Crisis

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