Sims on Efficacy of Fiscal Versus Monetary Policy

The video discusses the interplay between monetary and fiscal policies in addressing low inflation, particularly in Europe and Japan. It highlights the reluctance of central bankers to discuss fiscal policy's role and the need for cooperation between fiscal authorities and central banks. The conversation also touches on the challenges of shifting from monetary to fiscal policy, especially in crisis situations, and the common political tendency towards fiscal contraction instead of expansion.

What was notably absent from Draghi's speech according to the transcript?

• Talk about economic growth

• Reference to monetary policy

• Mention of inflation rates

• Discussion on fiscal policy

What is the main challenge in shifting from monetary to fiscal policy in the US?

• Lack of public interest

• Difficulty in ensuring effective coordination

• Insufficient monetary tools

• Over-reliance on central banks

Why do politicians and the public often react with fiscal contraction during crises?

• Due to concerns about deficits

• To increase inflation rates

• To support central banks

• To boost economic growth

What is the appropriate fiscal response when inflation is too low?

• Monetary tightening

• Interest rate hikes

• Fiscal contraction

• Fiscal expansion

What is necessary for central bankers to effectively control inflation?

• Increased interest rates

• Focus solely on monetary policy

• Cooperation with fiscal authorities

• Independence from fiscal authorities