In the Absence of Fiscal Union, the Eurozone Needs a More Flexible Monetary Policy

Abstract

The authors (AF and that AF and that their original model simply shows that, in the aftermath of the financial crisis, the size of the balance sheets of major central banks has exploded. Considering the high correlation between the size of central banks’ balance sheets and the monetary base, the obvious question is: if the quantity of the monetary base is not a useful concept, why are we having an indigestion of quantitative easing? JEL: E42, E52, E58.