Business Cycles, Macroeconomic Policies And Capital Markets

Economists and policymakers are today as ever divided in their assessment of the role that capital markets and economic policies play in fostering macroeconomic stability and economic growth. Essays on business cyles, marcoeconomic policies, and capital markets collects a series of empirical analyses on crucial issues in macroeconomics and finance in the past two decades. The establishment of the European Monetary Union and the recent big swings in the US federal deficit have reignited the debate on the (strategic?) interplay between budget and monetary stabilisation policies. To this end, the first two chapters shed some light on the interactions between monetary and fiscal policies in Europe and the US. Monetary aggregates are at the heart of the monetary policy strategy of the European Central Bank; the third chapter studies the joint behaviour of M3, inflation and output in aggregate data pre-1999. What drives exchange-rate fluctuations in the long run? Besides well-debated theories of the real exchange rate, the fourth chapter performs an innovative decomposition/attribution of real exchange rates shocks using historical data. The final chapter conducts an analysis of the joint behaviour of indicators of stockmarket valuation and measures of economic activity in the US.