Time for ECB to stop tightening the screws

Macroeconomics is hard.

Time for ECB to stop tightening the screws

It’s hard because there are actually few coherent theories, such internally coherent theories as we have often tend to be at odds with reality, the data is of fairly low frequency (monthly usually) and we can’t run experiments usually.

Those of us who are not practicing macroeconomists thus tend to fall back on fairly simple rules of thumb when assessing policies and outcomes, often by reference to the past. Thus in Europe the ECB has in fact run an experiment against the Federal Reserve.

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