crowding out

Feature image for “Policy Ineffectiveness in Open Economy Models,” showing a 2×2 matrix where fiscal policy is strong under fixed exchange rates but fails under floating rates, while monetary policy fails under fixed rates but is strong under floating rates.

Macroeconomic Trends and Analysis

Policy Ineffectiveness Open Economy: Channels and Regimes

Policy ineffectiveness in open economy models means a correct policy moves no output: monetary policy fails under a peg, fiscal...

June 2, 2026