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The paper subjects seven structural DSGE models, all used heavily by policymaking institutions, to discretionary fiscal stimulus shocks using seven different fiscal instruments, and compares the results to those of two prominent academic DSGE models. There is considerable agreement across models on both the absolute and relative sizes of different types of fiscal multipliers. The size of many multipliers is large, particularly for spending and targeted transfers. Fiscal policy is most effective if it has moderate persistence and if monetary policy is accommodative. Permanently higher spending or deficits imply significantly lower initial multipliers. (JEL E12, E13, E52, E62)

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We estimate a three-country model using 1995-2013 data for Germany, the Rest of the Euro Area (REA) and the Rest of the World (ROW) to analyze the determinants of Germany's current account surplus after the launch of the Euro. The most important factors driving the German surplus were positive shocks to the German saving rate and to ROW demand for German exports, as well as German labour market reforms and other positive German aggregate supply shocks. The convergence of REA interest rates to German rates due to the creation of the Euro only had a modest effect on the German current account and on German real activity. The key shocks that drove the rise in the German current account tended to worsen the REA trade balance, but had a weak effect on REA real activity. Our analysis suggests these driving factors are likely to be slowly eroded, leading to a very gradual reduction of the German current account surplus. An expansion in German government consumption and investment would raise German GDP and reduce the current account surplus, but the effects on the surplus are likely to be weak.

The article analyses in a simple setting a game between an inflationconservative central bank and a fiscal authority subject to an upper limit on the budget deficit. It is shown that complementarity or substitutability between the policies and the preference of each authority for the other authority's behaviour crucially depends on the type of shock hitting the economy. If the government attempts to stimulate output beyond its natural level, a 'deficit bias' emerges under non-co-operation; under co-operation, the equilibrium is characterized by both a 'deficit bias' and an 'inflation bias'. However, if the government only pursues cyclical stabilization these biases disappear and there are positive gains from co-ordinating the policy responses to shocks. * Earlier versions of this article have been presented in several conferences and workshops. We would like to thank discussants and participants for thoughtful comments. In particular, we are grateful to Ralph Bryant, Luisa Lambertini and, especially, Jacques Mélitz. We are also indebted to a number of Commission colleagues, two anonymous referees and the editor of this journal for valuable comments. Maarten van de Stadt provided excellent research assistance. The opinions expressed are those of the authors only and should not be attributed to the European Commission. The usual disclaimer applies. 802

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This report estimates possible macroeconomic effects of a pandemic taking place in the EU in 2006, using a quarterly macroeconomic model. The macroeconomic costs of a pandemic, that is the cost in terms of production lost due to illness and death measured as reductions in GDP growth and/or declines in the level of GDP, are quantified in various pandemic scenarios. We focus on two sectors of the European economy that are expected to be particularly severely hit, tourism and trade. The results are compared with those obtained in similar studies. Our basic conclusion is that, although a pandemic would take a huge toll in human suffering, it would most likely not be a severe threat to the European macroeconomy.

The global financial crisis led to a sharp contraction in both Euro Area (EA) and US real activity, and was followed by a long-lasting slump. However, the post-crisis adjustment in the EA and the US shows striking differences-in particular, the EA slump has been markedly more protracted. We estimate a three-region (EA, US and Rest of World) New Keynesian DSGE model (using quarterly data for 1999-2014) to quantify the drivers of the divergent EA and US adjustment paths. Our results suggest that financial shocks were key drivers of the 2008-09 Great Recession, for both the EA and the US. The post-2009 slump in the EA mainly reflects a combination of adverse aggregate demand and supply shocks, in particular lower productivity growth, and persistent adverse shocks to capital investment, linked to the continuing poor health of the EA financial system. Adverse financial shocks were less persistent for the US. The financial shocks identified by the model are consistent with observed performance indicators of the EA and US banking systems.JEL Classification: F4, F3, E2, E3, E5, E6 and C5