Tommaso Monacelli: Stabilization vs. Redistribution: The Optimal Monetary-Fiscal Mix - 25 October 2021

The Qatar Centre for Global Banking & Finance is delighted to welcome Professor Tommaso Monacelli from Bocconi University to present this research seminar on 'Stabilization vs. Redistribution: The Optimal Monetary-Fiscal Mix'.

Stabilization and redistribution are intertwined in a model with heterogeneity, imperfect insurance, and nominal rigidity, making fiscal and monetary policy inextricably linked for aggregate-demand management. Movements in inequality induced by fiscal transfers make the flexible-price equilibrium sub-optimal, thus triggering a stabilization vs redistribution trade-off. Likewise, changes in government spending that are associated with changes in the distribution of taxes (progressive vs. regressive) induce a trade-off for monetary policy: the central bank cannot stabilize real activity at its efficient level (including insurance) and simultaneously avoid inflation. Fiscal policy can be used in conjunction to monetary policy to strike the optimal balance between stabilization and insurance (redistribution) motives.

Tommaso Monacelli is Professor of Economics at Bocconi University (Milan), Fellow of IGIER (Innocenzo Gasparini Institute for Economic Research), CEPR (Centre for European Economic Policy), and Kiel Institute for the World Economy (IFW). He is currently Head of the Economics Department. He holds a Ph.D. in Economics from New York University, and has been previously Associate Professor at Bocconi and Assistant Professor at Boston College. He is currently Managing (Co-)Editor of Economic Policy, Associate Editor of the Journal of the European Economic Association, Journal of Money Credit and Banking, European Economic Review, and IMF Economic Review. He has been Visiting Professor at Columbia University (New York), and Central European University (CEU), research consultant for the ECB and the OECD, Visiting Scholar at IMF, ECB and Riksbank. His research interests are in the area of Monetary Economics, Macroeconomics, and International Macroeconomics.