But nor would there be any justification in allowing the negotiations to founder over 2.5 percentage points; BaFin and the Bundesbank see eye-to-eye on this. All the more as the positive effects of the reform clearly outweigh the negative ones.
That said, Ricardo and Alisdair show that automatic stabilisers can have more sizeable effects when the central bank is constrained by the effective lower bound on its policy rates. .