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This article was published on 22 August 2014 at 20:35.
The last change is the 22 August 2014 at 22:07.
To stimulate growth and create jobs you can. Even with the rigor of public accounts. The message that Mario Draghi, President of the European Central Bank has decided to launch at Jackson Hole Symposium organized by the Federal Reserve Bank of Kansas City and dedicated to the labor market, it is dedicated just to monetary policy and its role, and has rather emphasized the support for tax policy and the reforms can give to its action.
The euro will decline again
Draghi noted however that the ECB “stands ready to further modify its orientation, “evidently in a more expansive. He wanted to re-emphasize how the steps already taken have changed the perception of the currency markets, which leave the euro depreciate. “We’ve already seen that exchange rate movements should support both aggregate demand and inflation.” These movements, according to the ECB ‘shall be borne by the divergent paths expected for monetary policy in the United States and in the euro zone. ” The markets now serving a rate hike Use closest to that of the EMU and this – is the implicit conclusion of the reasoning of the Dragons – should bring down the euro / dollar.
The limits of monetary policy
Much more, however, monetary policy can not do, said Draghi. Unable to bring interest rates (short-term) below zero, “there is a real risk that monetary policy can lose effectiveness in generating aggregate demand”, which is necessary to reduce cyclical unemployment but also to support structural reforms (which without sufficient demand fail to become effective.
Growth and rigor , you can
Coming out, therefore, the policy issues monetary union in the strictest sense, Draghi reminded how we can support demand in a phase of rigor, which remains necessary: after an initial increase due to the Great Recession, unemployment increased in coincidence with the sovereign debt crisis. should firstly use all the flexibility that the current EU rules allow. should then reduce taxes, but so as not to increase the deficit. How? Lowering taxes in those areas where the stimulative effect of this maneuver is increased while reducing unproductive expenditures where the restrictive effect of these cuts is lower. In a note to the written text, there is also an indirect reference to tax rates, to reduce.
More public investment at European level
Draghi goes even further and Calls for greater coordination of fiscal policy at the level of the euro zone, so that it is no longer just the sum of the 18 national budgets of euro countries but to pursue desired goals and shared at the unit level. In this sense, Draghi supported the proposals of Jean-Claude Juncker, the next president of the European Commission, which wants to design a program of public and private investment of 300 billion. It should, he said, “a large public investment program, consistent with the proposals of the next president of the European Commission.” However, you must do very soon and, on the demand side. At this stage, Draghi said, ‘iI risk of doing’ too little ‘, exceeds that of doing’ too much ‘. ” It is therefore more likely and more severe than cyclical unemployment, that is reduced with shooting, becoming structural; less likely and less severe than is causing them excessive pressure on prices and wages.
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