Barry has a nice piece on Vox today. He is clearly right: we need the ECB to move to zero interest rates now, and match London and DC when it comes to quantitative easing. On the latter point: is this easy to do in the Eurozone context, or does it require institutional reform? Can a banking expert set me straight here?
2 replies on “Eichengreen on EMU”
Krugman has been fairly insistent that the Fed’s race towards the zero bound isn’t helping. Seeing as its not particularly likely that we’ll see a coordinated EU stimulus package, whats the future options if hitting the lower bound doesn’t work?
Kevin,
I don’t think there’s any constitutional barrier to quantitative easing. Eurosystem cannot lend to the public sector, but (as far as I can recall) is otherwise unconstrained in its monetary policy instruments.