In the absence of fiscal union, the Eurozone needs a more flexible monetary policy: A comment

Andrea Terzi

PSL Quarterly Review, 2016, vol. 69, issue 278, 279-285

Abstract: The article is a comment on Alessandrini and Michele Fratianni, 2015, on how can the euro area cope with inter-regional differences in the absence of fiscal union. This comment takes issue with the model that A&F use to support their proposals, raising two main remarks: first, diverging current account balances shaped the eurozone countries’ vulnerability but were not a cause of the euro area 2010-2012 liquidity crisis; and second, A&F’s quantity-theoretic view of monetary policy implementation is inapplicable to a floating currency like the euro, or to the T2 payment system.

Keywords: Eurozone; External Imbalances; Adjustment Mechanism (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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DOI: 10.13133/2037-3643_69.278_4

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