IDEAS home Printed from https://ideas.repec.org/a/psl/pslqrr/202244.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/17730/16956
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marc Lavoie, 2014. "Post-Keynesian Economics: New Foundations," Post-Print hal-01343652, HAL.
    2. Bindseil, Ulrich & Corsi, Marco & Sahel, Benjamin & Visser, Ad, 2017. "The Eurosystem collateral framework explained," Occasional Paper Series 189, European Central Bank.
    3. Karl Whelan, 2014. "TARGET2 and central bank balance sheets [The economics of TARGET2 balances]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 29(77), pages 79-137.
    4. James Culham, 2020. "Revisiting the concept of liquidity in liquidity preference," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 44(3), pages 491-505.
    5. Gabor, Daniela, 2021. "Revolution Without Revolutionaries: Interrogating the Return of Monetary Financing," SocArXiv ja9bk, Center for Open Science.
    6. Brett Fiebiger & Marc Lavoie, 2021. "Central bankers and the rationale for unconventional monetary policies: reasserting, renouncing or recasting monetarism?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 45(1), pages 37-59.
    7. repec:oup:ecpoli:v:29:y:2014:i:77:p:79-137 is not listed on IDEAS
    8. Victoria Chick & Sheila C. Dow, 2012. "On Causes and Outcomes of the European Crisis: Ideas, Institutions, and Reality," Contributions to Political Economy, Cambridge Political Economy Society, vol. 31(1), pages 51-66.
    9. Lorenzo Bini Smaghi & Daniel Gros, 2000. "Open Issues in European Central Banking," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-333-98188-7, December.
    10. Karl Whelan, 2016. "Banking Union and the ECB as Lender of Last Resort," Working Papers 201609, School of Economics, University College Dublin.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. PhilippineCour-Thimann, 2013. "CESifo Forum Special Issue April 2013: Target Balances and the Crisis in the Euro Area," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 0, pages 05-50, May.
    2. Martin Hellwig, 2019. "Target-Falle oder Empörungsfalle? – Zur deutschen Diskussion um die Europäische Währungsunion," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2019_05, Max Planck Institute for Research on Collective Goods.
    3. Karsten Kohler, 2024. "Capital Flows and the Eurozone's North-South Divide," Politics & Society, , vol. 52(2), pages 304-330, June.
    4. Ábel, István & Losoncz, Miklós, 2022. "A pénzelmélet megújulása válságok idején [The renewal of monetary theory in times of crisis]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 451-479.
    5. Philippine Cour-Thimann, 2013. "CESifo Forum Special Issue April 2013: Target Balances and the Crisis in the Euro Area," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 0(1), pages 05-50, May.
    6. Botte, Florian & Dallery, Thomas, 2019. "Analyse systématique du modèle de Bhaduri et Marglin à prix flexibles : « Ça dépend de la valeur des paramètres » [Systematic analysis of the Bhaduri-Marglin Model with flexible prices: « It depend," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 26.
    7. Roberto Veneziani & Luca Zamparelli & Michalis Nikiforos & Gennaro Zezza, 2017. "Stock-Flow Consistent Macroeconomic Models: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1204-1239, December.
    8. Spies-Butcher, Ben & Bryant, Gareth, 2024. "The history and future of the tax state: Possibilities for a new fiscal politics beyond neoliberalism," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 98(C).
    9. Rezai, Armon & Stagl, Sigrid, 2016. "Ecological Macreconomics: Introduction and Review," Ecological Economic Papers 9, WU Vienna University of Economics and Business.
    10. Pitsoulis, Athanassios & Schwuchow, Soeren C., 2017. "Holding out for a better deal: Brinkmanship in the Greek bailout negotiations," European Journal of Political Economy, Elsevier, vol. 48(C), pages 40-53.
    11. Nguyen, Minh, 2020. "Collateral haircuts and bond yields in the European government bond markets," International Review of Financial Analysis, Elsevier, vol. 69(C).
    12. Siemoneit, Andreas, 2023. "Growth imperatives as a conflict between efficiency and justice," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 301394.
    13. repec:clr:wugarc:y:2016v:42i:04p:617 is not listed on IDEAS
    14. Jacques Pelkmans, 2006. "Testing for Subsidiarity," Bruges European Economic Policy Briefings 13, European Economic Studies Department, College of Europe.
    15. Giandomenica Becchio, 2020. "The Two Blades of Occam's Razor in Economics: Logical and Heuristic," Economic Thought, World Economics Association, vol. 9(1), pages 1-17, July.
    16. Nieto, Jaime & Carpintero, Óscar & Miguel, Luis J. & de Blas, Ignacio, 2020. "Macroeconomic modelling under energy constraints: Global low carbon transition scenarios," Energy Policy, Elsevier, vol. 137(C).
    17. Reddy, Niall, 2024. "“Downsize And Distribute” Or “Merge And Monopolize”? A Critique Of Corporate Financialization Theories," SocArXiv 2zy5h_v1, Center for Open Science.
    18. Gersbach, Hans & Böser, Florian, 2020. "Monetary Policy with a Central Bank Digital Currency: The Short and the Long Term," CEPR Discussion Papers 15322, C.E.P.R. Discussion Papers.
    19. Economides, George & Papageorgiou, Dmitris & Philippopoulos, Apostolis, 2020. "Macroeconomic policy lessons from Greece," LSE Research Online Documents on Economics 107155, London School of Economics and Political Science, LSE Library.
    20. Massimo Cingolani, 2015. "Sylos Labini su Marx: implicazioni per la politica economica (Sylos Labini on Marx: economic policy implications)," Moneta e Credito, Economia civile, vol. 68(269), pages 81-147.
    21. Louis-Philippe Rochon & Guillaume Vallet, 2022. "The institutions of the people, by the people and for the people? Addressing central banks' power and social responsibility in a democracy," PSL Quarterly Review, Economia civile, vol. 75(301), pages 83-102.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:psl:pslqrr:2022:44. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Carlo D'Ippoliti (email available below). General contact details of provider: http://www.economiacivile.it .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.