Monetary and Fiscal Policy in Euro Zone with Default Risk: Developing Endogenous Default Model

• Project/Area Number: 25380400
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Research Field: Money/ Finance
• Research Institution: Nagoya City University (2014-2015); Chiba Keizai University (2013)
• Principal Investigator: Okano Eiji 名古屋市立大学, 経済学研究科(研究院), 教授 (20406713)
• Project Period (FY): 2013-04-01 – 2016-03-31
• Project Status: Completed (Fiscal Year 2015)
• Budget Amount: ¥4,290,000 (Direct Cost: ¥3,300,000、Indirect Cost: ¥990,000); Fiscal Year 2015: ¥1,560,000 (Direct Cost: ¥1,200,000、Indirect Cost: ¥360,000); Fiscal Year 2014: ¥1,300,000 (Direct Cost: ¥1,000,000、Indirect Cost: ¥300,000); Fiscal Year 2013: ¥1,430,000 (Direct Cost: ¥1,100,000、Indirect Cost: ¥330,000)
• Keywords: ソブリンリスク / DSGE / 効用関数の2次近似 / ベイズ推定 / 最適金融政策 / 最適財政政策 / 共通通貨圏 / 債務不履行 / ポリシーミックス

Outline of Final Research Achievements

Monetary policy suppressing inflation magnifies volatilities on inflation and GDP gap through an increase in welfare costs while monetary policy pegging interest rate on risky assets to it on safety assets stabilizes default immediately and coincides with a decrease in welfare costs through suppressing volatilities on inflation and GDP gap. In a small open economy, fiscal policy slushing public debt temporally when shocks diminishing tax revenue occur increases welfare costs.

Research Products

• [Journal Article] Inflation Stabilization and Default Risk in a Currency Union (2014)
  • Author(s): Okano Eiji Masashige Hamano Pierre Picard
  • Journal Title: Understanding Persistent Deflation in Japan Working Paper Series Volume: 46
  • Acknowledgement Compliant
• [Journal Article] How Important is Fiscal Policy Cooperation in a Currency Union? (2014)
  • Author(s): OKANO, Eiji
  • Journal Title: Journal of Economic Dynamics and Control Volume: 36 Pages: 39-79
  • DOI: 10.1016/j.jedc.2013.11.002
  • Peer Reviewed
• [Presentation] Inflation Stabilization and Default Risk in a Currency Union (2015)
  • Author(s): OKANO, Eiji, Masashige Hamano and Pierre Picard
  • Organizer: The 47th Money, Macro and Finance Research Group Annual Conference
  • Place of Presentation: Cardiff University
  • Year and Date: 2015-09-10
  • Int'l Joint Research
• [Presentation] Inflation Stabilization and Default Risk in a Currency Union (2015)
  • Author(s): OKANO, Eiji, Masashige Hamano and Pierre Picard
  • Organizer: Singapore Economic Review Conference 2015
  • Place of Presentation: Mandarin Orchard Singapore
  • Year and Date: 2015-08-05
  • Int'l Joint Research
• [Presentation] Inflation Stabilization and Default Risk in a Currency Union (2015)
  • Author(s): OKANO, Eiji, Masashige Hamano and Pierre Picard
  • Organizer: Australian Conference of Economists
  • Place of Presentation: Queensland University of Technology
  • Year and Date: 2015-07-09
  • Int'l Joint Research
• [Presentation] Inflation Stabilization and Default Risk in a Currency Union (2015)
  • Author(s): OKANO, Eiji, Masashige Hamano and Pierre Picard
  • Organizer: 2nd International Conference on “Financial Markets and Nonlinear Dynamics”
  • Place of Presentation: ESSCA Campus Paris
  • Year and Date: 2015-06-04
  • Int'l Joint Research
• [Presentation] Inflation Stabilization and Default Risk in a Currency Union (2015)
  • Author(s): OKANO, Eiji, Masashige Hamano and Pierre Picard
  • Organizer: 日本経済学会2015年春季大会
  • Place of Presentation: 新潟大学
  • Year and Date: 2015-05-24
• [Presentation] Inflation Stabilization and Default Risk in a Currency Union (2014)
  • Author(s): OKANO, Eiji
  • Organizer: 14th Eurasia Business and Economics Society Conference
  • Place of Presentation: Silken Diagonal Barcelona
  • Year and Date: 2014-10-23
• [Presentation] Inflation Stabilization and Default Risk in a Currency Union (2014)
  • Author(s): 岡野衛士
  • Organizer: 日本金融学会2014年秋季大会
  • Place of Presentation: 山口大学
  • Year and Date: 2014-10-18
• [Presentation] Inflation Stabilization and Default Risk in a Currency Union (2014)
  • Author(s): OKANO, Eiji
  • Organizer: 日本金融学会中部部会
  • Place of Presentation: 愛知学院大学
  • Year and Date: 2014-09-14
• [Presentation] Inflation Stabilization and Default Risk in a Currency Union (2014)
  • Author(s): OKANO, Eiji
  • Organizer: The 10th Annual Conference, Asia Pacific Economic Association
  • Place of Presentation: The Imperial Queen’s Park Hotel, Bangko
  • Year and Date: 2014-07-12
• [Presentation] Productivity Shocks and Monetary Policy in a Two-Country Model (2013)
  • Author(s): Jang, Taeseok and Eiji Okano
  • Organizer: The 9th Dynare Conference
  • Place of Presentation: Shanghai University of Finance and Economics, Shanghai, China
• [Remarks] 岡野衛士
  • URL: http://www.econ.nagoya-cu.ac.jp/~eiji_okano/