Etienne Vaccaro-Grange*, Sameera Awawda**

phd seminar

Etienne Vaccaro-Grange*, Sameera Awawda**

AMSE
Quantitative easing and the term premium as a monetary policy instrument*
Who bears the burden of universal health coverage? An overlapping-generations general equilibrium model applied to Palestine**
Venue

IBD Salle 16

Îlot Bernard du Bois - Salle 16

AMU - AMSE
5-9 boulevard Maurice Bourdet
13001 Marseille

Date(s)
Tuesday, January 9 2018| 12:30pm to 2:00pm
Contact(s)

Edward Levavasseur: edward.levavasseur[at]univ-amu.fr
Océane Piétri: oceane.pietri[at]univ-amu.fr
Morgan Raux: morgan.raux[at]univ-amu.fr

Abstract

*This paper analyses the effects of Quantitative Easing on inflation and economic activity through the term premium channel in the Euro Area. We extract a term premium factor from an arbitrage-free discrete-time Shadow rate term structure model and plug it into a Bayesian Structural VAR including inflation and economic activity. A QE shock is then identified using an advanced Narrative sign restrictions procedure. Preliminary results show that the unconventional measure raises output but actually tends to reduce inflation.

**Universal Health Coverage (UHC) is considered as the workhorse to attain the 2015-2030 Sustainable Development Goals (SDGs). However, as soon as implementation is concerned, several challenges arise. Among these is the question of the redistributive effects of UHC among and across generations. Indeed, given the expected fiscal deficit resulting from the expansion of coverage, the welfare impact of the UHC may not be neutral across generations. Unless a policy adjustment is undertaken, future generations may well foot the bill of the UHC. This raises the important policy questions of who bears the burden of the UHC and whether the UHC-fiscal stance is sustainable. These two questions are addressed using an overlapping generations model within a general equilibrium framework (OLG-CGE) applied to Palestine. We assess and compare alternative ways of financing the UHC-debt (viz. deferred-debt-finance, current and phased-manner finance) and their implications on fiscal sustainability and intergenerational inequalities. Results show that in the absence of any policy adjustment, the implementation of UHC would explode the deficit-GDP and debt-GDP ratios. This indicates that the UHC-fiscal stance is rather unsustainable in the long-term, thus, calling for a policy adjustment to service the UHC-debt. Among the policies we examined, a current rather, than deferred, debt-finance appears to be favored in terms of its implications for both fiscal sustainability and intergenerational inequality.