MONETARY – FISCAL POLICY INTERACTIONS IN THE EURO AREA
Research Article
MONETARY – FISCAL POLICY INTERACTIONS IN THE EURO AREA
ABSTRACT
The last review of the ECB's monetary policy strategy in 2003 followed a period of mostly upside risks to price stability. The experience of the 2008 financial crisis has focused renewed attention on how monetary and fiscal policy should best interact, especially in an environment of structurally low interest rates and persistent downside risks to price stability. This debate was further intensified by the economic impact of the coronavirus (COVID-19) pandemic. In the eurozone, the unique architecture of a monetary union consisting of sovereigns мember сtates, with heterogeneity and weaknesses between countries in the overall share construction, poses important challenges. Against this background, this report reviews the interactions of monetary-fiscal policy in the eurozone from the perspective of monetary policy and with a focus on consequences for price stability and maintaining the independence and credibility of the central bank. The paper presents a conceptual framework for thinking about monetary-fiscal political interactions, thus setting the stage for a discussion specifically about the Eurozone aspects and challenges. Specifically, it looks at it main ingredients of consensus before the global financial crisis for monetary-fiscal political interactions and refers to significant new insights and refinements which have gained importance since 2003. In doing so, the paper distinguishes between general conceptual aspects – ie. those aspects that relate to the environment characterized by a single central bank and a single fiscal authority and those aspects relating to an environment characterized by a single central bank and many fiscal authorities (multi-country monetary union).
MUMINOVIC, H.,
(2023). MONETARY – FISCAL POLICY INTERACTIONS IN THE EURO AREA. Journal of Law And Politics, 4(1), 20-25. Arrival Date Posted By:https://jlp.ibupress.com/articles/monetary-fiscal-policy-interactions-in-the-euro-area
