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COVID-19 and Fiscal Policy in the Euro Area

F. Busetto    ICMA Centre, Henley Business School, University of Reading, UK; European Central Bank

Alfonso Dufour    ICMA Centre, Henley Business School, University of Reading, UK    

Simone Varotto    ICMA Centre, Henley Business School, University of Reading, UK    

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abstract

In this chapter we document fiscal policy developments in the main euro area economies over the last two decades and highlight the dramatic changes triggered by the COVID-19 pandemic. We analyse how euro area yield curves respond to COVID-19 related expectations of fiscal expansion. We show how fiscal constraints may affect interest rates. Upward pressure on national yields from higher debt levels could compromise fiscal and financial stability in the long-term.

Published
July 31, 2020
Accepted
June 30, 2020
Submitted
June 3, 2020
Language
EN
ISBN (EBOOK)
978-88-6969-442-4