Philipp Pfeiffer

European Commission | ec · Economic and Financial Affairs (ECFIN)

The Greek economy has experienced low levels of corporate investment for many years. The Loan Facility is a component of Greece's Recovery and Resilience Plan (RRP), in the context of the EU-wide NextGenerationEU initiative. Worth about EUR 18 billion, it is the largest measure funded by the EU across all RRPs in terms of percentage of national GDP...

We estimate an open economy DSGE model to study the fiscal policy implications of downward nominal wage rigidity (DNWR) in a monetary union. DNWR has significantly exacerbated the recession in the southern euro area countries and is important for the design of fiscal policy. We show that a cut in social security contributions paid by employers (equ...

This paper compares the COVID-19 recession in the euro area (EA) and the US using an estimated multi-region New Keynesian macroeconomic model. To capture quarterly dynamics from 2020 onwards, we introduce relevant extensions such as ‘forced’ savings, extensive versus intensive employment margins, and trade in commodities as inputs to production and...

In response to the recession brought about by the COVID-19 pandemic, EU-wide macroeconomic policy has launched an unprecedented coordinated fiscal expansion across the EU (Next Generation EU or NGEU), financed by issuing common debt. Given NGEU’s nature, it is essential to take fiscal spillovers into consideration when assessing the overall macroec...

This paper augments the European Commission’s open-economy DSGE model (GM) with COVID-specific shocks (‘forced savings’, labour hoarding) and financially-constrained investors to account for the extreme volatility of private domestic demand and hours worked during COVID-19, and it estimates the model on Euro Area data for the period 1998q4-2021q4....

Timing premia measure how much consumption people are willing to forgo to resolve all consumption uncertainty immediately. We develop a novel experiment that allows to elicit these attitudes directly, in a model-free way. On average subjects forgo around 5% of their total consumption to resolve all uncertainty immediately. Recursive utility models...

The COVID-19 pandemic led to a sharp contraction of economic activity in the euro area (and worldwide). Its anatomy differs strongly from other crises in recent history. We analyse the short-term economic effects of the COVID-19 shock through the lens of an estimated DSGE model. We augment the canonical DSGE set-up with ‘forced savings’ (lockdowns,...

Estimated DSGE models tend to ascribe a significant and often predominant part of a country's trade balance (TB) dynamics to domestic drivers (“shocks”), suggesting foreign factors to be only of secondary importance. This paper revisits the result based on more agnostic approaches to shock transmission and using “agnostic structural disturbances”....

This paper analyses optimal fiscal policy when the rate at which governments can borrow changes persistently. To analyse trade-offs, we allow for fiscal distortions and productive government spending and characterise the optimal mix between spending and revenue measures in a low rate environment. We find that low interest rates on government bonds...

This paper quantitatively assesses the relative importance of demand and supply factors in the recent slowdown of US growth. For this purpose, we estimate a DSGE model with heterogeneous firms and endogenous Schumpeterian growth. We find that Keynesian fluctuations in risk premia and savings behavior drive the recession. However, our results challe...

Estimated DSGE models tend to ascribe a significant and often predominant part of a country's trade balance (TB) dynamics to domestic drivers ("shocks"), suggesting foreign factors to be only of secondary importance. This paper revisits the result based on more agnostic approaches to shock transmission and using "agnostic structural disturbances"....

Timing premia measure how much consumption people are willing to forgo to resolve all consumption uncertainty immediately. We develop a novel experiment that allows to elicit these attitudes directly, in a model-free way. On average subjects forgo around 4% of their total consumption to resolve all uncertainty immediately. Recursive utility models...