O efeito BCE

Para quem se interessa sobre por crises financeiras, equilíbrios múltiplos, profecias auto-cumpridas e a hipótese de Paul de Grauwe: How did the ECB save the eurozone without spending a single euro, no Vox.

The German Court’s decision appears to be based on the implicit assumption that the dramatic surges in credit risk in the Euro region were exclusively a consequence of deteriorating macroeconomic fundamentals; and thus, it was not a ‘business’ of the ECB to interfere with this self-evident relationship between fundamentals and sovereign debt spreads (see De Grauwe 2014, Giavazzi et al. 2013). In other words, it was implicitly assumed that a given state of economic conditions across Eurozone countries would always correspond to a single equilibrium interest rate in the bond markets.  Under this premise, every Eurozone sovereign would “deserve” the interest rate it pays on its bonds, which would be utterly tied to its economic fundamentals. In plain words, the dramatic increase in default risk in many Eurozone countries had nothing to do with market panic or financial speculation; it was deemed by the German sceptics as the natural reflection of economic mismanagement in these countries, and hence should be corrected by better management (i.e. austerity and structural reforms).

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Paul De Grauwe was right in his diagnosis of the Eurozone as a fragile region and relatedly, of the recent debt crises as having a strong element of self-fulfilling dynamics. The OMT has been an effective medicine to overcome the fragility. However, these reflections should not mask the fact that the euro is still an incomplete construct. Hopefully a day will arrive in the near future when the Eurozone is complemented with a fiscal authority with possibly centralised tax and redistributive powers so that it eventually evolves towards a currency with a single political and fiscal union.

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