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Conventional direction to unconventional measures: using quantitative easing to shape Eurozone fiscal capacity

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posted on 2023-06-09, 14:18 authored by Olimpia Fontana, Simone Vannuccini
Eight years after the outbreak of the crisis, the Eurozone (EZ) fiscal policy remains fragmented at the national level. This paper fills the structural gap between the monetary and fiscal dimensions of EZ economic policy by suggesting a ‘conventional’ direction to the unconventional Quantitative Easing (QE) policy of the European Central Bank (ECB). We propose an evolution for QE to tackle the shortcomings of the current ‘decentralized’ fiscal policy in the EZ. In a nutshell, we suggest a change in the composition of QE asset purchases, focusing on buying European Investment Bank (EIB) bonds that, in turn, would be used to finance real investments through the Juncker Plan programme. The rationale of our proposal is legitimised by an overview of the gloomy macroeconomic conditions of the EZ, and the situation in ongoing policies. The mechanism is described in detail, with a discussion of both its strengths and possible limitations.

History

Publication status

  • Published

File Version

  • Published version

Journal

Perspectives On Federalism

ISSN

2036-5438

Publisher

De Gruyter Open

Issue

2

Volume

8

Page range

124-E

Article number

E

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2018-07-31

First Open Access (FOA) Date

2018-07-31

First Compliant Deposit (FCD) Date

2018-07-30

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