The Failure of ECB Monetary Policy from a Mises-Hayek Perspective

Arbeitspapier

The paper analyses the common European monetary policy based on a Mises-Hayek overinvestment framework, which is combined with the theory of optimum currency areas. It shows how since the turn of the millennium a too expansionary monetary policy contributed to unsustainable overinvestment booms in the periphery of the European Monetary Union, and more recently in Germany, dependent on the national fiscal policy stances. It is argued that the ECB´s ultra-loose monetary policy as a crisis therapy puts a drag on long-term growth by conserving distorted economic structures. To preserve political stability a timely exit from the ultra-expansionary monetary policy is postulated.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 6388

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy ; Central Banks and Their Policies ; International Policy Coordination and Transmission ; Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
• Subject: Hayek ; Mises ; European Monetary Union ; European Central Bank ; monetary overinvestment theory ; optimum currency areas ; fiscal policy ; asymmetric shocks ; secular stagnation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schnabl, Gunther
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/161827
• Last update: 10.03.2025, 11:44 AM CET