20 Years of European Monetary Policy. From Doctrinarism to Realpolitik


  • Luis Ángel Hierro
  • Antonio José Garzón
  • Helena Domínguez-Torres




Euro, monetary policy, ECB, cyclical asynchrony


This paper describes the monetary policy of the European Central Bank since the birth of the Euro. The different economic situations and the monetary policies implemented during the mandate of each one of the three ECB presidents are analysed as a process of evolution. We study the situations of cyclical asynchrony together with the response given to it by the European monetary authority. We also assess the change experienced by the main economic indicators of the twelve founding countries during the 20 years of the single currency. The main conclusion obtained is that monetary policy has evolved from the strict approach defined in the Treaty on the Functioning of the European Union to an approach closer to that of the rest of central banks, which we have called “monetary realpolitik”.

JEL Codes - E50; E52; E58


Ahlborn, M., and Wortmann, M., 2018. The core-periphery pattern of European business cycles: A fuzzy clustering approach. Journal of Macroeconomics, 55, 12-27. http://dx.doi.org/10.1016/j.jmacro.2017.08.002

Arce, O., Nuno, G., and Thomas, C., 2019. The Eurosystem's monetary policy following the end of net asset purchases. Banco de Espana Article, 4, 19. http://dx.doi.org/10.2139/ssrn.3341314

Ayuso, J., and Malo de Molina, J. L., 2011. El papel de los bancos centrales durante la crisis financiera: lecciones para el futuro. Papeles de la Fundación, 42, 49-64.

Bank for International Settlements, 2003. Development in the advanced industrial economies BIS 73rd Annual Report.

Belke, A., Domnick, C., and Gros, D., 2017. Business cycle synchronization in the EMU: Core vs. periphery. Open Economies Review, 28(5), 863-892. http://dx.doi.org/10.1007/s11079-017-9465-9

Borrallo Egea, F., and Hierro, L., 2015. La eficacia de la política monetaria durante la crisis económica mundial. Revista de Economía Mundial, 41, 43-80.

Borrallo Egea, F., and Hierro, L., 2019. Transmission of monetary policy in the US and EU in times of expansion and crisis. Journal of Policy Modeling, 41(4), 763-783. http://dx.doi.org/10.1016/j.jpolmod.2019.02.012

Castañeda, J. E., and Congdon, T., 2017. Have central banks forgotten about money? The case of the European Central Bank, 1999–2014. In T. Congdon (Ed.), Money in the Great Recession. Did a Crash in Money Growth Cause the Global Slump? : Edward Elgar Pub.

Coe, D. T., and Helpman, E., 1995. International R&D spillovers. European Economic Review, 39(5), 859-887. http://dx.doi.org/10.1016/0014-2921(94)00100-E

CSEMU, 1989. Report on Economic and Monetary Union in the European Community. Committee for the Study of Economic and Monetary Union (Chairman: Jeacques delors).

De Grauwe, P., 2011a. The European Central Bank as a lender of last resort. VOX. https://voxeu.org/article/european-central-bank-lender-last-resort.

De Grauwe, P., 2011b. The European Central Bank as lender of last resort in the government bond markets. CESifo Working paper 3569.

De Grauwe, P., 2013. Design Failures in the Eurozone: Can they be fixed? London School of Economics and Political Sciences. “Europe in Question” Discussion Paper Series, 57/2013.

de Lucas Santos, S., and Delgado Rodriguez, M. J., 2016. Core-Periphery Business Cycle Synchronization in Europe and the Great Recession. Eastern European Economics, 54(6), 521-546. http://dx.doi.org/10.1080/00128775.2016.1238767

European Central Bank, 2011. The monetary policy of the ECB: European Central Bank.

European Parliament, 2012. Eorobarometer 76.1. Crisis. http://bit.do/ffDpk.

Flassbeck, H., and Lapavitsas, C., 2015. Against the Troika: Crisis and Austerity in the Eurozone: Verso Books.

Frankel, J. A., and Rose, A. K., 1998. The endogenity of the optimum currency area criteria. Economic Journal (London), 108(449), 1009-1025. http://dx.doi.org/10.1111/1468-0297.00327

Furceri, D., and Karras, G., 2008. Business-cycle synchronization in the EMU. Applied Economics, 40(12), 1491-1501.

Gogas, P., 2013. Business cycle synchronisation in the European Union: The effect of the common currency. Journal of Business Cycle Research, 2013(1), 1.

Goncalves, C. E. S., Rodrigues, M., and Soares, T., 2009. Correlation of business cycles in the euro zone. Economics Letters, 102(1), 56-58. http://dx.doi.org/10.1016/j.econlet.2008.11.011

Gouveia, S., and Correia, L., 2008. Business cycle synchronisation in the Euro area: The case of small countries. International Economics and Economic Policy, 5(1-2), 103-121. http://dx.doi.org/10.1007/s10368-008-0103-2

Grigoras, V., and Stanciu, I. E., 2016. New evidence on the (de) synchronisation of business cycles: Reshaping the European business cycle. Inter Economics, 147, 27-52. http://dx.doi.org/10.1016/j.inteco.2016.03.002

Harding, D., and Pagan, A., 2002. Dissecting the cycle: A methodological investigation. Journal of Monetary Economics, 49(2), 365-381. http://dx.doi.org/10.1016/S0304-3932(01)00108-8

Hartmann, P., and Smets, F., 2018. The first twenty years of the European Central Bank: monetary policy. European Central Bank Working Paper Series, 2219.

Hernández de Cos, P., 2018. La política monetaria del Banco Central Europeo durante la crisis y los retos de futuro. ICE, Revista De Economía, 903, 63-77. http://dx.doi.org/10.32796/ice.2018.903.6655

Imbs, J., 2004. Trade, finance, specialization, and synchronization. The Review of Economics and Statistics, 86(3), 723-734. http://dx.doi.org/10.1162/0034653041811707

Inklaar, R., Jong-A-Pin, R., and De Haan, J., 2008. Trade and business cycle synchronization in OECD countries--A re-examination. European Economic Review, 52(4), 646-666. http://dx.doi.org/10.1016/j.euroecorev.2007.05.003

International Monetary Fund, 2003. World Economic Outlook: Public debt in emerging markets. Washington DC: IMF.

Kalemli-Ozcan, S., Sorensen, B. E., and Yosha, O., 2003. Risk sharing and industrial specialization: Regional and international evidence. The American Economic Review, 93(3), 903-918. http://dx.doi.org/10.1257/000282803322157151

Konstantakopoulou, I., and Tsionas, E., 2011. The business cycle in Eurozone economies (1960 to 2009). Applied Financial Economics, 21(20), 1495-1513. http://dx.doi.org/10.1080/09603107.2011.579060

Krugman, P., 2001. Lessons of Massachusetts for EMU'. International Library of Critical Writings in Economics, 134, 41-61.

Lehwald, S., 2013. Has the Euro changed business cycle synchronization? Evidence from the core and the periphery. Empirica, 40(4), 655-684. http://dx.doi.org/10.1007/s10663-012-9205-8

Micossi, S., 2015. The Monetary Policy of the European Central Bank (2002-2015). CEPS Special Report, 109.

Millaruelo, A., and del Río, A., 2013. Las medidas de política monetaria no convencionales del BCE a lo largo de la crisis. Boletín económico-Banco de España, 1, 89-99.

Mundell, R. A., 1961. A theory of optimum currency areas. The American Economic Review, 51(4), 657-665.

Papadimitriou, T., Gogas, P., and Sarantitis, G. A., 2016. Convergence of European business cycles: A complex networks approach. Computational Economics, 47(2), 97-119. http://dx.doi.org/10.1007/s10614-014-9474-3

Soares, M. J., 2011. Business cycle synchronization and the Euro: A wavelet analysis. Journal of Macroeconomics, 33(3), 477-489. http://dx.doi.org/10.1016/j.jmacro.2011.02.005

Tortola, P. D., and Pansardi, P., 2019. The charismatic leadership of the ECB presidency: A language-based analysis. European Journal of Political Research, 58(1), 96-116. http://dx.doi.org/10.1111/1475-6765.12272

Williamson, J., 1993. Democracy and the "Washington consensus". World Development, 21(8), 1329-1336. http://dx.doi.org/10.1016/0305-750X(93)90046-C




How to Cite

Hierro, L. Ángel, Garzón, A. J., & Domínguez-Torres, H. (2019). 20 Years of European Monetary Policy. From Doctrinarism to Realpolitik. Scientific Annals of Economics and Business, 66(Special issue - dedicated to the Interna), 149–172. https://doi.org/10.47743/saeb-2019-0032