QE in Europe Further details reveal regional weighting but less than total mutual risk sharing

The ECB QE plan is a very interesting variant of the model I first proposed when I first started writing about greater monetization of the debt as a policy tool in the late 1980s and early 1990s. In a paper which I presented to a conference sponsored by the Canadian plains research centre and later published in 1992 in a collection of papers from the conference edited by Jim McCrorie and M.MacDonald , The Constitutional Future of the Prairie and Atlantic Regions of Canada, Canadian Plains Reserarch Centre, University of Regina, I explored how to implement the reform in a regionally balanced way in the Canadian federation.I suggested allowing each province access to the debt monetization capacities of the central bank up to a limit that in total would equal monetized debt in relation to the broadly defined money stock which would not exceed 20 %.The formula for each province’s allocation within that limit would be calculated in relation to each province’s GDP as a percentage of the total national GDP.(A Regional approach to Monetary and Fiscal Policy,in McCrorie &MacDonald p.114) The ECB has essentially adopted a similar approach with each member state (excepting for the time being Greece) being allocated a share of monetized debt which is proportionate to the share of the given country’s contribution to the capital of the European central bank. My model did not exclude any province that was more indebted than others nor did it restrict mutualization in the way which the ECB plan proposes. Nevertheless I am glad to see the regional principle at work in Europe. Its a long way from Regina to Brussels and Frankfurt but the Canadian plains once again illuminated a progressive reform with global consequences over twenty years ago.


About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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