On Tuesday, 27 August, the European Central Bank (ECB) organised a lunch session with panel discussion as part of the annual EEA-ESEM conference. This year, Erasmus School of Economics hosted the conference, which lasted five days. Participants in this session, entitled Fiscal-Monetary Interactions - Lessons from the Recent Experience, were Klaas Knot (president of De Nederlandsche Bank), Agnès Bénassy-Quéré (vice-governor of the Banque de France) and Rolf Strauch (chief economist of the European emergency fund ESM).
Recently, both Het Financieele Dagblad and Bloomberg highlighted the panel discussion. The discussion included the ECB's expansionary fiscal policy. The corona pandemic, increased military spending after the Russian invasion and support measures to mitigate effects of inflation are the main reasons for this. At the same time, monetary policy has turned to a sharp tightening in response to rising inflation, which has increased the government's borrowing costs.
Rolf Strauch sees a similar development in the economy: ‘the effects on the economy were strong but temporary, and they led to a prolonged rise in both inflation and interest rates.’ Knot, president of De Nederlandsche Bank, sees a nuance: productivity growth. ‘The more output per worker increases, the greater the growth potential of an economy,’ he argues.
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You can download the full article from Het Financieele Dagblad, 27 August 2024, above.
You can download the full article from Bloomberg, 27 August 2024, above.