The US has undertaken much larger discretionary fiscal packages than euro area governments, particularly in 2021. The large 2021 US fiscal package is likely to provide a welcome boost to the euro area economy. There is a risk, however, that US fiscal policy could lead to overheating of the US economy and a possible monetary tightening from the Fed which could trigger a recession.
This paper argues this scenario is unlikely to occur but discusses the implications for the ECB if it did. This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 21 June 2021.
Source : © European Union, 2021 – EP
Reference: In-Depth Analysis – Implications for the Euro Area of US Macroeconomic Policies – 16-06-2021