De Grauwe, Paul, Ji, Yuemei, (2013), “Fiscal implications of the ECB’s bond-buying programme”, www.voxeu.org, 14 Ιουνίου.
The monetary-fiscal policy connection is under scrutiny by the German Constitutional Court in the context of the ECB’s OMT bond-buying programme. This column argues that most analyses are deeply flawed by the misapplication of private-company default principles to the central bank. ECB bond-buying transforms public bonds into monetary base, and sovereign-default risk into inflation risk. The real question is: What is the non-inflationary limit to money-base expansion? This depends upon the economic situation and is much higher in currently liquidity-trap setting.