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The Monetary Policy of the European Central Bank (2002-2015)

Author

Listed:
  • Stefano Micossi

    (Director General ASSONIME, Visiting Professor at the College of Europe)

Abstract

This paper examines the policies pursued by the European Central Bank (ECB) since the inception of the euro. The ECB was originally set up to pursue price stability, with an eye also to economic growth and financial stability as subsidiary goals, once the primary goal was secured. The application of a single monetary policy to a diverse economic area has entailed a pronounced pro-cyclicality in its real economic effects on the eurozone periphery. Later, monetary policy became the main policy instrument to tackle financial instability elicited by the failure of Lehman Brothers and the sovereign debt crisis in the eurozone. In the process, the ECB emerged as the lender of last resort in the sovereign debt markets of participating countries. Persistent economic depression and deflation eventually brought the ECB into the uncharted waters of unconventional policies. That the ECB could legally perform all of these tasks bears witness to the flexibility of the TFEU and its Statute, but its tools and operating procedures were stretched to their limit. In the end, the place of the ECB amongst EU policy-making institutions has been greatly enhanced, but has entailed repeated intrusions into the broader domain of economic policies – not least because of its market intervention policies – whose consequences have yet to be ascertained.

Suggested Citation

  • Stefano Micossi, 2015. "The Monetary Policy of the European Central Bank (2002-2015)," Bruges European Economic Policy Briefings 35, European Economic Studies Department, College of Europe.
  • Handle: RePEc:coe:wpbeep:35
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Papaioannou, Sotiris, 2016. "Public spending, monetary policy and growth: Evidence from EU countries," MPRA Paper 70331, University Library of Munich, Germany.
    2. repec:rfe:zbefri:v:35:y:2017:i:2:p:249-275 is not listed on IDEAS
    3. van Riet, Ad, 2017. "Monetary Policy Stretched to the Limit: How Could Governments Support the European Central Bank?," MPRA Paper 83451, University Library of Munich, Germany.
    4. Mirdala, Rajmund, 2015. "Exchange Rate Pass-Through in the Euro Area," MPRA Paper 68862, University Library of Munich, Germany.
    5. Micossi, Stefano, 2016. "Balance-of-Payments Adjustment in the Eurozone," CEPS Papers 11250, Centre for European Policy Studies.
    6. Engelbert Stockhammer & Collin Constantine & Severin Reissl, 2016. "Explaining the Euro crisis: Current account imbalances, credit booms and economic policy in different economic paradigms," Working Papers PKWP1617, Post Keynesian Economics Society (PKES).
    7. repec:erc:cypepr:v:11:y:2017:i:2:p:19-62 is not listed on IDEAS
    8. repec:eee:jpolmo:v:39:y:2017:i:2:p:272-289 is not listed on IDEAS
    9. Jean-Pierre Allegret & Audrey Allegret-Sallenave, 2016. "Intra-European Union Imbalances and Cyclical Position: Does Monetary Policy Matter?," Post-Print hal-01410832, HAL.
    10. Burriel, Pablo & Galesi, Alessandro, 2018. "Uncovering the heterogeneous effects of ECB unconventional monetary policies across euro area countries," European Economic Review, Elsevier, vol. 101(C), pages 210-229.
    11. Messori, Marcello & Micossi, Stefano, 2018. "Counterproductive Proposals on Euro Area Reform by French and German Economists," CEPS Papers 13438, Centre for European Policy Studies.

    More about this item

    Keywords

    Monetary Policy; European Central Bank; Quantitative easing; Financial and economic crisis;

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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