By
Lawrence Chemineau
the
25/08/2014
for
Agefi.fr
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What are the prospects opened by Mario Draghi, since the meeting of central bankers in Jackson Hole, August 22?
In his speech in Jackson Hole, Mario Draghi creates conditions for a new eurozone economic policy. It starts from the analysis of unemployment in the Eurozone that he has good economic and structural causes. We must act on the business level with greater coordination of monetary and fiscal policies and act in the long-term structural reforms. It is concerned about the low level of activity seen for example through the growth figures for the second quarter, the persistently high unemployment and very low inflation (0.4% in July).
On the latter much he was sharper than at press conferences held after the monthly meetings of the ECB. He wondered about the protracted nature of very low inflation and macroeconomic consequences that cause term. This is in my opinion the reason for his change of position. Inflation is very low and inflation expectations are reduced. He is also concerned about not being able to monetary means are those of the ECB to quickly reduce the risk of deflation. It is because of this risk that advocates greater coordination of fiscal and monetary policies.
Mario Draghi he exhausted the resources of monetary policy and fiscal policy apparait- him it now as a remedy?
Taking into account the measures taken in June, the ECB has played its part. It could increase if its intervention on the ABS market could be set up quickly to facilitate corporate financing. In part that is hers and given the observed expectations on monetary policy, Mario Draghi believes this is not enough to counter the risk of inflation too low for too long. Monetary policy alone is not enough and additional resources are reduced. It is therefore necessary to give meaning to fiscal policy. It also indicates his inability to do what other central banks that can guarantee the public debt. There again a claim that the ECB is effectively the lender of last resort as could be the Fed in the USA or the Bank of England in the UK.
Fiscal policy has been constrained and could not play its role in supporting demand as has been the case in other major economies. For this is the key point: Mario Draghi said that the demand in the euro zone is too small not to restart and sustain economic machine. This lack of tension is at the heart of the risk of deflation that threatens the eurozone.
What exactly Mario Draghi calls?
It sets out four priorities that involve the use of all possible margins in the defined framework for fiscal policy is to say the pact for stability and growth. He advocates to adapt the composition of fiscal policy in order to restore more effectively to promote growth. This is for example the choice between decreased weight of taxation and spending. He recommends taking a measure of fiscal policy in the Eurozone rather than country by country and finally implement a stimulus program of public investment to improve the conditions for growth in the medium and long term .
demand is too low and monetary policy alone can not create the conditions for more robust demand. We need a fiscal policy for the Euro area is the consideration of the ECB on the budget plan. This European fiscal policy should use all the room available to boost growth. It should also establish a public investment program to create a pulse on private investment and improve the potential growth (which was strongly affected by low investment since 2008).
Mario Draghi talking about structural unemployment rate close to 9% for the Euro zone. This is high, too high. We must therefore put in place measures which aim must be to improve the competitiveness of the euro zone and the ability to give it a more self-sustaining growth. One way to see the need for these structural reforms is the inability of the economy to leave the eurozone spontaneously forward.
Finally It seeks to facilitate the allocation of resources to support the deployment of business and employment in sectors that are progressing. In a recession, sectors that walk out are not the ones that worked well before the recession. The aim here is to promote the transfer of resources between sectors. The second point made by the President of the ECB is the training that should improve the quality of work and investment
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