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Revising the European Central Bank’s fiscal rules to support growth and employment

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  • Mario Tonveronachi

Abstract

The paper presents a reform proposal for the operations of the European Central Bank (ECB) whose purpose is to create a common set of risk-free assets for financial institutions operating in the euro area (EA), which is the necessary condition for having a single internal financial market. The proposal does not require the introduction of changes in the existing European Union treaties. The effects of this reform on the debt dynamic of EA member countries permit a revision of the existing fiscal rules. With the help of some simulations, it is shown that maintaining compliance with the European treaties, the reform of the ECB operations and revised fiscal rules would transform the current fiscal deflationary stance into a reflationary one. Some implications for aggregate demand and growth for the EA are briefly discussed.

Suggested Citation

  • Mario Tonveronachi, 2015. "Revising the European Central Bank’s fiscal rules to support growth and employment," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 38(4), pages 495-508, November.
    • Handle: RePEc:mes:postke:v:38:y:2015:i:4:p:495-508
    DOI: 10.1080/01603477.2015.1109998
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    References listed on IDEAS

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    1. Jan Kregel, 2014. "Wright Patman's Proposal to Fund Government Debt at Zero Interest Rates: Lessons for the Current Debate on the US Debt Limit," Economics Policy Note Archive 14-2, Levy Economics Institute.
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    Cited by:

    1. Elisabetta Montanaro, 2023. "La vigilanza bancaria. Storia, teorie, prospettive di Lorenzo Esposito e Giuseppe Mastromatteo: un articolo di recensione (La vigilanza bancaria. Storia, teorie, prospettive by Lorenzo Esposito and Gi," Moneta e Credito, Economia civile, vol. 76(302), pages 133-153.

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    1. Mario Tonveronachi, 2015. "The ECB, the Single Financial Market, and a Revision of the Euro Area Fiscal Rules," Economics Public Policy Brief Archive ppb_140, Levy Economics Institute.

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