The Euro-Area Crisis and the Monetary Policy Response of the ECB
A Critical Investigation and Some Reform Proposals
Bibliographic Data
| ID | 7989949 |
|---|---|
| Authors | Louis‐philippe Rochon (0000-0002-8542-7497, Laurentian University), Sergio Rossi (0009-0002-5926-5356, University of Fribourg) |
| Year | 2023 |
| Volume | 54 |
| Issue | 1 |
| Pages | 16-28 |
| Publication date | 2023-08-16 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Forum for Social Economics (JOURNAL) |
| Journal identifiers | ISSN: 0736-0932 • E-ISSN: 1874-6381 |
| Publisher | Taylor & Francis (PUBLISHER • GB) |
| DOI | 10.1080/07360932.2023.2245978 |
| OpenAlex | W4385876621 |
| Language | EN |
| Citations received | 1 |
| References cited | 18 |
This paper investigates the monetary–structural origins of the euro-area crisis and offers a critical analysis of the monetary policy decisions of the European Central Bank in this regard. The first section explains that the euro-area crisis is the unavoidable result of the monetary architecture of the European Monetary Union, where the TARGET2 payment system lacks an international settlement institution to make sure that every cross-border transaction is paid finally. To solve this issue, the second section suggests a monetary–structural reform of the TARGET2 payment system in the spirit of Keynes’s Plan. The third section focuses on the European Central Bank, to point out the major flaws and shortcomings of its monetary policy strategy, particularly after the euro-area crisis burst near the end of 2009. The last section concludes and provides some political economy considerations.KEYWORDS : European central bankfinancial crisesKeynes’s planTARGET2 payment systemJEL CODES: : E42E52E58 Notes1 To be sure, there are some fiscal transfers between euro-area member countries, such as the Common Agricultural Policy and the EU structural and investment funds, but their amounts are small compared to these countries’ GDP. As Capella-Ramos et al. (Citation2020) show, fiscal transfers between euro-area countries have been contributing to income redistribution across this area, but not to a real convergence between these countries’ economies.2 See Rossi (Citation2013) for a critical analysis of the functioning of the TARGET2 system and an explanation of the relationship between the ECB and the national central banks of euro-area member countries.3 With respect to a 2 per cent inflation target, Benjamin Friedman (Citation2018, p. 187) argued that “there is the arbitrariness surrounding the current 2 percent target. In retrospect, the paucity of serious empirical research underlying the identification of the 2 percent norm, now quite some time back, is a professional embarrassment
Economic policy · Economics · International economics · Monetary economics · Monetary hegemony · Monetary policy · Economic Theory and Policy · Fiscal Policies and Political Economy · Global Financial Crisis and Policies
| Unique citing works | 1 |
|---|---|
| Citations per year | 0,5 |
| Citation span | 2024 - 2024 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 1 |