Purpose: This paper analyzes real and welfare effects of a permanent change in inflation rate, focusing on macroprudential policy’ role and its interaction with monetary policy.Design/methodology/approach: While investigating disinflation costs, the authors simulate a medium-scale dynamic general equilibrium model with borrowing constraints, credit frictions and macroprudential authority.Findings: Providing discussions on different policy scenarios in a context where still it is expected high inflation, there are three key contributions. First, when macroprudential authority actively operates to improve financial stability, losses caused by disinflation are limited. Second, a Taylor rule directly responding to financial variables might entail a trade-off between price and financial stability objectives, by increasing disinflation costs. Third, disinflation is welfare improving for savers, while costly for borrowers and banks. Indeed, while savers benefit from policies reducing price stickiness distortion, borrowers are worried about credit frictions, coming from collateral constraint.Practical implications: The paper suggests threefold policy implications: the macroprudential authority should actively intervene during a disinflation process to minimize costs and financial instability deriving from it; policymakers should implement a disinflationary policy stabilizing also output; the central bank and the macroprudential regulator should pursue financial and price stability goals, separately.Originality/value: This paper is the first attempt to study effects of a permanent inflation target reduction in focusing on the macroprudential policy’ role.

Digitalisation, driven by the transformative impact of digital technologies, has an important role in the energy transition process. Advancements in these technologies are bringing about significant changes in how energy is generated, transmitted, and utilised. In particular, digital technologies enable modern smart grids to optimise energy management by integrating renewable energy sources more effectively. In this context, the paper explores the effects of smart grids on the energy transition, emphasising their benefits and the key incentives that promote investment. Addition-ally, it reviews current trends in smart grid development across European countries, with a specific focus on Italy. The objective is to provide a comprehensive overview of the investments required to implement both existing and new smart grid projects. Copyright© 2024 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.

The space economy is becoming increasingly relevant for macroeconomic growth and technological spillovers, yet its interaction with monetary policy remains largely unexplored. This paper studies how monetary policy affects aggregate and aerospace-sector dynamics in a two-sector DSGE model. We compare a standard Taylor rule with a space-augmented rule that incorporates space-sector innovation productivity as a supply-side signal for potential spillover effects. Monetary tightening reduces aggregate activity and aerospace output, while the augmented rule makes the policy response more front-loaded and amplifies short-run effects. Thus, accounting for space-sector innovation can reshape monetary transmission as space activities gain macroeconomic relevance.

This paper studies directed innovation in a dynamic space economy where orbital space is a productive but congestible commons. Space services raise aggregate productivity, while orbital debris increases collision risk and weakens the long-run value of space infrastructure. Innovation can be directed toward orbit-intensive technologies or toward orbit-preserving technologies. We solve a finite-horizon policy problem in which a planner chooses the path of preserving research and an orbital-use tax, and we compute the preserving-research subsidy required to decentralize the optimal allocation. The results show that the optimal transition operates mainly through the innovation margin. Redirecting scientists toward orbit-preserving research raises the relative productivity of preserving technologies, reduces collision risk and debris accumulation, and supports higher long-run output. The orbital-use tax is inactive in the benchmark calibration but becomes relevant when the welfare cost of debris is high. The findings suggest that sustainable growth in the space economy requires policies that not only regulate current orbital use, but also redirect technological change toward preserving the orbital environment.

This paper develops a New Keynesian DSGE model for China with heterogeneous households, a housing sector, bank intermediation, and an explicit fiscal sector. The framework allows us to assess the macroeconomic implications of expansionary fiscal and monetary policies that are consistent with the policy orientation set out in the draft Fifteenth Five-Year Plan. It also examines the role of macroprudential policy in housing and credit markets, which are central to growth prospects, financial conditions, and debt sustainability in China. The main findings are threefold. First, fiscal and monetary expansions both stimulate output and inflation, but through different channels. The former raises aggregate demand and borrowers' income, whereas the latter reduces borrowing costs and increases the collateral value of housing. By contrast, macroprudential easing operates primarily through housing and credit markets, expanding borrowing without generating immediate inflationary pressure. Second, fiscal and monetary expansions reduce the consumption-based Gini index, while an increase in the loan-to-value ratio raises inequality. Third, the welfare analysis confirms and complements these results. Overall, the analysis sheds new light on the interaction among fiscal, monetary, and macroprudential policies in China and provides a useful basis for policy assessment in an environment of high debt, weak growth, and housing-market fragility.