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Coordination(?) between Branches of Economic Policy across Euro Area

Author

Listed:
  • Kristóf Lehmann

    (Magyar Nemzeti Bank)

  • Olivér Nagy

    (Magyar Nemzeti Bank)

  • Zoltán Szalai

    (Magyar Nemzeti Bank)

  • Balázs H. Váradi

    (Magyar Nemzeti Bank)

Abstract

policy – monetary policy and fiscal policy – across the euro area. Growth in the euro area has noticeably decelerated in the past three decades, meaning the economy of the euro area has departed significantly from the logic of the Maastricht criteria. In addition, the lack of a common budget at euro area level and the fact that the oft-conflicting rules overlook sectoral interrelationships also point to the existence of a systemic problem. The difficulties have become increasingly evident in recent years as even the ultra-loose monetary policy has failed to stimulate economic growth significantly. This adverse process was intensified further by fiscal policy, which was intended to be consistent with the fiscal rules formulated in line with Maastricht criteria and can be considered tight, overall, at the euro area level. In recent months, even the policymakers of the European Central Bank have embarked on an open debate with regard to the role of policy branches. In the current political and legal framework, the ECB may be left with limited leeway for easing monetary conditions. In light of all these factors, there may be a need for a more active fiscal policy to stimulate the euro area economy, which, however, may sharpen the debate between the policymakers of individual Member States.

Suggested Citation

  • Kristóf Lehmann & Olivér Nagy & Zoltán Szalai & Balázs H. Váradi, 2020. "Coordination(?) between Branches of Economic Policy across Euro Area," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 19(1), pages 37-64.
  • Handle: RePEc:mnb:finrev:v:19:y:2020:i:1:p:37-64
    as

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    References listed on IDEAS

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    Cited by:

    1. Gábor P. Kiss, 2020. "Aggregate Fiscal Stabilisation Policy: Panacea or Scapegoat?," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 19(2), pages 55-87.
    2. Miklós Losoncz & Csaba G. Tóth, 2020. "Government Debt Reduction in the Old EU Member States: Is This Time Different?," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 19(2), pages 28-54.

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    More about this item

    Keywords

    monetary policy; fiscal policy; economic policy coordination; Maastricht criteria;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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