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How Loose, How Tight? A Measure of Monetary and Fiscal Stance for the Euro Area (IMF, 76 page read) A dynamic monetary and fiscal conditions index through 2007-18 confirms an overreliance on monetary support in the Euro area since 2014. This new model highlights the importance of a significant fiscal response to the COVID crisis. [Bearish bonds]
Negative Interest Rate Debate Needs Clarity (OMFIF, 3 min read) To achieve a more meaningful debate on negative rates, we need better consideration of the context (NIRP in itself is not the cause of low growth and inflation) and a fuller discussion on the operational consequences (cash hoarding and financial instability from pressure on net interest margins).
What’s the ECB Doing in Response to the COVID-19 Crisis? (Brookings, 10 min read) This is a fairly comprehensive recap of the ECB’s policy measures over the past several years including key differences between ECB and Fed governance. Last week’s upsizing of PEPP didn’t quite make it in, with the article published on the same day as the ECB meeting.