SMP: Unintended Consequences of Monetary Policy Part II: ECB

La segunda parte de nuestro post, junto a Andreas Hoffmann, sobre las consecuencias no intencionadas de la política monetaria. En este caso sobre el Banco Central Europea (ECB).

The Federal Reserve’s (Fed) and European Central Bank’s (ECB) policy responses to the recent financial disasters offer two tales of unintended consequences. Our previous post outlined the undesired effects of the Fed’s policies. In this post, we suggest that the ECB’s stabilization policies did not only fail to achieve its goals. Monetary policy has also hampered the structural adjustment of the European economy and prolonged the crisis.

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WP: Unintended Consequences of ECB Policies

En este working paper (WP) junto a Andreas Hoffmann estudiamos los efectos no intencionados del Banco Central Europeo en la Zona Euro y en la periferia, tanto antes como luego de la crisis financiera del 2008.

We revisit the unintended consequences of the European Central Bank’s (ECB) low-interest rate policies with a focus on the periphery countries of the European Union (EU) since the 2000s from a modern Austrian perspective. We argue that convergence expectations and the ECB’s expansionary monetary policy were conducive to credit booms that turned bust in 2007/8. The subsequent European debt crisis revealed that the money-induced credit boom also incentivized governments to increase borrowing at relatively low rates. Second, we shed some light on adverse effects of the ECB crisis management thru an Austrian lens. We suggest that ECB policies were not successful in stimulating bank lending and investment. The main beneficiaries of holding rates at low levels are governments, who use the financial leeway to delay painful reforms. Consequently, ECB policy has (unintentionally) slowed down the recovery in the crisis economies and worsened Europe’s growth prospects since 2009.

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WP: Monetary Policy, the Composition of GDP, and Crisis Duration in Europe (with A. Hoffamann)

Un nuevo working paper sobre los efectos de la política monetaria, junto a Andreas Hoffmann (University of Leipzig) está disponible. Este trabajo, debido a falta de datos entre otros retrasos, nos llevó bastante tiempo. De manera análoga al paper sobre Latino América, observamos la semi-elasticidad del nivel de producto a cambios en la tasa de interés a nivel industrial para una serie de países (Belgica, República Checa, Dinamarca, Francia, Alemania, Italia, Latvia, Holanda, Polonia y Portugal.)

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