Policy brief

Monetary Policy on the Way Out of the Crisis

Publishing date
17 December 2009

Senior Non-Resident Fellow Jürgen von Hagen offers his recommendations for the proper monetary policy to lead the eurozone out of the crisis. He argues that the tentative recovery in the euro area indicates that both monetary and fiscal policy can be normalised soon. However, because delaying fiscal consolidation would result in greater debt burdens whereas monetary policy can be quickly adjusted to respond to unforeseen developments, there is less risk involved if a fiscal exit comes first. In any case, the two strategies must be coordinated and the European Central Bank must be very clear on its interest rate policies. This paper was prepared as part of testimony for the European Parliament's Economic and Monetary Affairs Committee. 

About the authors

  • Jürgen von Hagen

    Jürgen von Hagen, a German citizen, was Bruegel'‘s first Non-resident Senior Fellow. His widely acclaimed work on European integration addresses public finance and political economy issues.

    Jürgen is the Director of the Center for European Integration Studies in Bonn, a Research Fellow of the CEPR and a member of the Academic Advisory Council to the German Federal Minister of Economics and Labor.

    He has previously taught at Indiana University (1987-92) and the University of Mannheim (1992-96). His current interests include macroeconomics of European integration and the euro area and European public finance.

Related content