In the labyrinthine world of macroeconomic policy, Ana Paula Ribeiro’s (MACGROW) work evinces the importance of adaptable and coordinated policy frameworks to navigate the Euro Area’s diverse and constrained economic landscape.
In a study with Nuno Gonçalves (Banco de Portugal), Paula delves into fiscal policy effectiveness amidst growing policy uncertainty. They show that imperfect information significantly influences the multipliers of fiscal policy. Specifically, it increases the multiplier of temporary fiscal shocks while reducing that of permanent ones. According to Paula, this suggests that uncertainty about the nature of a fiscal shock increases the efficiency of stabilization fiscal policies. "This result has several implications, reinforcing the normative recommendation that permanent debt consolidation efforts should be enacted during times of high uncertainty or the observation that expansionary policies during elections, and thus more uncertain times, have weaker effects."
Transitioning to monetary policy, in a study with Carolina Araújo (Banco de Portugal) and Vítor Carvalho (MACGROW), Paula finds significant heterogeneity within the Euro Area in the transmission of monetary policy through the credit channel. Specifically, the reactivity of credit granted is more pronounced in countries characterized by banks with above-average size or non-financial firms with lower profitability and higher debt levels. This underscores the heightened effectiveness of the credit channel in countries like Greece and Portugal. "These results recommend country-specific policy measures or ways to harmonize the banking system and the corporate landscape across member countries, as they face common shocks."
In other contributions with Celsa Machado (MACGROW) and Tatiana Kirsanova (U.Glasgow), the result of research partnership and life-long friendship, Paula further explores the nuanced interplay between monetary and fiscal policies, how high debt levels constrain stabilization in smaller countries, or the challenges and strategies surrounding the Zero Lower Bound. She is keen on exploring issues on demand-side stabilization policies or studying and assessing the determinants of policy effectiveness and its unequal effects across countries in the Euro Area.
