Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161827
Authors: 
Schnabl, Gunther
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6388
Abstract: 
The paper analyses the common European monetary policy based on a Mises-Hayek overinvestment framework, which is combined with the theory of optimum currency areas. It shows how since the turn of the millennium a too expansionary monetary policy contributed to unsustainable overinvestment booms in the periphery of the European Monetary Union, and more recently in Germany, dependent on the national fiscal policy stances. It is argued that the ECB´s ultra-loose monetary policy as a crisis therapy puts a drag on long-term growth by conserving distorted economic structures. To preserve political stability a timely exit from the ultra-expansionary monetary policy is postulated.
Subjects: 
Hayek
Mises
European Monetary Union
European Central Bank
monetary overinvestment theory
optimum currency areas
fiscal policy
asymmetric shocks
secular stagnation
JEL: 
E52
E58
F42
E63
Document Type: 
Working Paper

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