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Institutional constraints, liquidity provision, and endogenous money in the Eurozone core and periphery before and after crises: A preliminary comparison of the Eurozone Crisis and the Coronavirus Pandemic

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  • Nina Eichacker

    (University of Rhode Island, USA)

Abstract

This paper compares the Eurosystem's response to the Global Financial Crisis with the Coronavirus Pandemic in 2020, and argues that the European Central Bank (ECB) embraced more accommodative monetary policies within the Eurozone after 2011. Using cross-sectoral balance sheet data, it shows that ECB decisions to constrain or enable liquidity provision across the Eurozone changed between the 2008 GFC and the Coronavirus Crisis. These changes reflect Post-Keynesian theories of liquidity preference and endogenous money. Though the Eurosystem has returned to inflation targeting at the time of writing, the ECB's willingness to extend novel monetary support during past crises creates precedent for similar responses to future crises.

Suggested Citation

  • Nina Eichacker, 2022. "Institutional constraints, liquidity provision, and endogenous money in the Eurozone core and periphery before and after crises: A preliminary comparison of the Eurozone Crisis and the Coronavirus Pan," PSL Quarterly Review, Economia civile, vol. 75(303), pages 403-424.
    • Handle: RePEc:psl:pslqrr:2022:44
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Liquidity; crises; endogenous money; Eurozone;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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