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  3. A year ago, monetary union looked as if it was heading for certain death, with the European banking system in apparent meltdown

A year ago, monetary union looked as if it was heading for certain death, with the European banking system in apparent meltdown

admin2022-11-10  74
问题     A year ago, monetary union looked as if it was heading for certain death, with the European banking system in apparent meltdown and extreme divergence in monetary conditions across the single currency area. In all but name, monetary union had already ceased to exist.
    Action by the ECB (European Central Bank), first with the cash-for-debt Long Term Refinancing Operation and, more recently, the promise of unlimited bond purchases, has succeeded in stilling the waters, at least to some degree. Even a Greek exit seems, for the time being, to be off the table. With more austerity, Berlin seems minded to give Greeks another chance—until the next bail-out, in any case.
    But, though the single currency may have been saved from imminent death on the operating table, it seems now to be heading for a scarcely more appetising alternative—a condition of chronic, long-term illness where still very tight monetary conditions in many parts of the eurozone in combination with lockstep austerity threaten to induce a virtually permanent state of depression. Even Germany shows every sign of slipping back into economic contraction.
    For Britain, still reliant as it is on some sort of a recovery in European trade to see it through its own austerity program, there could scarcely be a set of circumstances less helpful to long-term recovery than this.
    New research by Dawn Holland and Jonathan Portes of the National Institute of Economic and Social Research has confirmed what has long been suspected—that co-ordinated fiscal consolidation across many EU countries has not only had a substantially larger negative impact on growth than expected, but has also had the very reverse consequence to the one intended by raising rather than lowering debt-to-GDP ratios.
    You need to be a little bit careful with these findings, which are somewhat self-serving. Under Jonathan Portes, the National Institute has positioned itself very much on the stimulus side of the austerity-versus-stimulus debate. This is a paper that sets out to prove that the poor growth performance of most EU countries, including the UK, is primarily down to fiscal austerity.
    Nonetheless, the number crunching seems to be robust enough, and it’s hard to disagree with the paper’s central finding that fiscal multipliers are much larger than in more normal times when consolidation is conducted collectively and into conditions of an already depressed economy.
    Even so, the paper suffers from one, rather glaring, omission. Whether you are on the big or small state side of the argument, there is no doubt that fiscal consolidation is urgently needed in much of the eurozone periphery (外围), and some parts of the core as well.
Which of the following is an idea held by Jonathan Portes?
选项 A、Britain’s poor growth performance was due to fiscal austerity.
B、His findings are not suitable for the countries like the UK.
C、Most EU countries should raise their debt-to-GDP ratios.
D、EU countries should rely on fiscal austerity to avoid depression.
答案A
解析
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