The ECB Under the Threat of Fiscal Dominance – The Individual Central Banker Dimension
Friedrich Heinemann () and
Additional contact information
Kemper Jan: ZEW - Leibniz Centre for European Economic Research, Mannheim, Germany
The Economists' Voice, 2021, vol. 18, issue 1, 5-30
This paper examines the threat of fiscal dominance for central banks with a focus on the individual dimension. A general symptom of fiscal dominance is a feedback loop from sovereign debt developments to monetary policy decisions. Our theoretical reasoning clarifies under which assumptions the individual members in a federal central bank system should pay particular attention to their home regions’ public debt situation. We present empirical evidence for the existence of such a repercussion in the context of the ECB Council. Based on public statements regarding the Pandemic Emergency Purchase Programme (PEPP), we classify the governors of the euro area national central banks (NCB) and the ECB board members as “hawks”, “neutrals,” and “doves”. We correlate the resulting classification with their home countries’ debt level. The resulting pattern is consistent with what can be expected for a regime of fiscal dominance. Whereas the doves tend to come from high-debt countries, the average debt level of the hawks’ home countries is significantly lower. As expected, this pattern is even more pronounced for the NCB presidents than for board members.
Keywords: PSPP; PEPP; central bank independence; political economy of central banking (search for similar items in EconPapers)
JEL-codes: E42 H12 H63 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
For access to full text, subscription to the journal or payment for the individual article is required.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bpj:evoice:v:18:y:2021:i:1:p:5-30:n:2
Ordering information: This journal article can be ordered from
Access Statistics for this article
The Economists' Voice is currently edited by Michael Cragg, Dwight Jaffee and Joseph Stiglitz
More articles in The Economists' Voice from De Gruyter
Bibliographic data for series maintained by Peter Golla ().