IDEAS home Printed from https://ideas.repec.org/a/spr/epolit/v33y2016i2d10.1007_s40888-016-0032-4.html
   My bibliography  Save this article

The ECB: a reluctant leading character of the EMU play

Author

Listed:
  • Francesco Saraceno

    () (OFCE-Sciences Po
    LUISS-SEP)

Abstract

Abstract This paper assesses the performance of the European Central Bank (ECB) during the crisis that started in 2008. The ECB statute is consistent with a view of the economy that was predominant in the 1990s, that postulates a very limited role for discretional policies in managing the business cycle. The ECB had therefore to stretch its mandate in several occasions, during the crisis, to avoid severe outcomes. It was unable to avoid a slow but inexorable slide of the Eurozone towards deflation and a liquidity trap. To restore robust growth, fiscal policy should be used, and institutions should be redesigned away from the Berlin–Washington Consensus framework that shaped the Maastricht Treaty. Better rules for fiscal governance and a wider ECB mandate are proposed.

Suggested Citation

  • Francesco Saraceno, 2016. "The ECB: a reluctant leading character of the EMU play," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 33(2), pages 129-151, August.
  • Handle: RePEc:spr:epolit:v:33:y:2016:i:2:d:10.1007_s40888-016-0032-4
    DOI: 10.1007/s40888-016-0032-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40888-016-0032-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance, 2014. "Les enjeux du triple mandat de la BCE," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 175-186.
    2. Ben S. Bernanke & Mark Gertler, 2001. "Should Central Banks Respond to Movements in Asset Prices?," American Economic Review, American Economic Association, vol. 91(2), pages 253-257, May.
    3. Jean-Paul Fitoussi & Francesco Saraceno, 2013. "European economic governance: the Berlin–Washington Consensus," Cambridge Journal of Economics, Oxford University Press, vol. 37(3), pages 479-496.
    4. Francesco Saraceno, 2015. "Challenges for the ECB in Times of Deflation," Sciences Po publications 183, Sciences Po.
    5. Blot, Christophe & Creel, Jérôme & Hubert, Paul & Labondance, Fabien & Saraceno, Francesco, 2015. "Assessing the link between price and financial stability," Journal of Financial Stability, Elsevier, vol. 16(C), pages 71-88.
    6. Jean-Paul Fitoussi & Francesco Saraceno, 2008. "Fiscal Discipline as a Social Norm: The European Stability Pact," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(6), pages 1143-1168, December.
    7. Jean-Paul Fitoussi & Francesco Saraceno, 2011. "Inequality, the Crisis and After," Rivista di Politica Economica, SIPI Spa, issue 1, pages 9-27, January-M.
    8. repec:mes:challe:v:33:y:1990:i:4:p:57-59 is not listed on IDEAS
    9. Jérôme Creel & Paola Monperrus-Veroni & Francesco Saraceno, 2009. "On The Long-Term Effects Of Fiscal Policy In The United Kingdom: The Case For A Golden Rule," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(5), pages 580-607, November.
    10. Francesco Saraceno & Roberto Tamborini, 2015. "How can it work? On the impact of quantitative easing in the Eurozone," DEM Working Papers 2015/03, Department of Economics and Management.
    11. Fabrizio Balassone & Daniele Franco, 2000. "Public investment, the Stability Pact and the ‘golden rule’," Fiscal Studies, Institute for Fiscal Studies, vol. 21(2), pages 207-229, June.
    12. Cukierman, Alex, 2013. "Monetary policy and institutions before, during, and after the global financial crisis," Journal of Financial Stability, Elsevier, vol. 9(3), pages 373-384.
    13. Gore, Charles, 2000. "The Rise and Fall of the Washington Consensus as a Paradigm for Developing Countries," World Development, Elsevier, vol. 28(5), pages 789-804, May.
    14. Adrian, Tobias & Shin, Hyun Song, 2010. "Liquidity and leverage," Journal of Financial Intermediation, Elsevier, vol. 19(3), pages 418-437, July.
    15. repec:ilo:ilowps:488129 is not listed on IDEAS
    16. Hans-Werner Sinn, 2014. "Austerity, Growth and Inflation: Remarks on the Eurozone's Unresolved Competitiveness Problem," The World Economy, Wiley Blackwell, vol. 37(1), pages 1-13, January.
    17. Olivier Blanchard & Giovanni Dell'Ariccia & Paolo Mauro, 2010. "Rethinking Macroeconomic Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(s1), pages 199-215, September.
    18. Angel Ubide, 2013. "How to Form a More Perfect European Banking Union," Policy Briefs PB13-23, Peterson Institute for International Economics.
    19. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance, 2014. "Dealing with the ECB's triple mandate?," Sciences Po publications info:hdl:2441/53ccj34tat8, Sciences Po.
    20. repec:spo:wpmain:info:hdl:2441/114p6m6s0395gqm0es4g7kgv3u is not listed on IDEAS
    21. repec:spo:wpecon:info:hdl:2441/9909 is not listed on IDEAS
    22. Jérôme Creel & Francesco Saraceno, 2010. "The Crisis, Automatic Stabilisation, and the Stability Pact," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 0(1), pages 75-103, January.
    23. Michael Woodford, 2012. "Inflation Targeting and Financial Stability," NBER Working Papers 17967, National Bureau of Economic Research, Inc.
    24. Philip Lowe & Claudio Borio, 2002. "Asset prices, financial and monetary stability: exploring the nexus," BIS Working Papers 114, Bank for International Settlements.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. On the Political Nature of Monetary Policy
      by Francesco Saraceno in Sparse Thoughts of a Gloomy European Economist on 2017-02-21 00:10:54

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Francesco Saraceno, 2016. "When Keynes goes to Brussels : a New Fiscal Rule for the EMU ?," Documents de Travail de l'OFCE 2016-32, Observatoire Francais des Conjonctures Economiques (OFCE).
    2. Piroska, Dóra, 2017. "Funding Hungary: Exposing Normal and Dysfunctional Crisis Management," Corvinus Economics Working Papers (CEWP) 2017/01, Corvinus University of Budapest.
    3. Maria Savona, 2018. "Industrial policy for a Europeanindustrial renaissance. A few reflections," SPRU Working Paper Series 2018-07, SPRU - Science and Technology Policy Research, University of Sussex.

    More about this item

    Keywords

    ECB; EMU crisis; Monetary policy; Non conventional policies;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:epolit:v:33:y:2016:i:2:d:10.1007_s40888-016-0032-4. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.