Begg, Iain


New era, new strategy: the ECB’s revised approach to monetary policy

On 8 July 2021, the European Central Bank revealed its revised monetary policy strategy. It had been a long time coming: the previous strategy had been in place for eighteen years and even then had not changed much from the original strategy agreed in October 1998, just prior to the launch of monetary union. A review to be concluded by the end of 2020 had been announced in January 2020, but was extended in April 2020, because of the pandemic, until the second semester of 2021.

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The post Covid-19 new normal, a time for the decidedly abnormal: an opportunity for modern monetary theory?

With governments daily announcing ever more extensive economic support packages, fiscal and other rules discarded, and monetary policy about as easy as it could conceivably be, the macroeconomic paradigm prevailing across Europe has been transformed. The questions now are what next and how will matters evolve as the Covid-19 economic crisis abates? A much-discussed answer has been modern monetary theory (MMT), an approach to macroeconomic policymaking that had already gained considerable traction prior to the pandemic.

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