BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - A budget common for all euro area countries would support monetary policy during deep recessions, European Central Bank Executive Board member Peter Praet said Friday.
'The key question for the economics profession is whether it is possible to remove the link between the stabilization function and the re-distributive function, allowing for a central budget of moderate size to have a meaningful macroeconomic stabilization effect,' Praet said at a speech in Frankfurt.
'If this were possible, such a central budget could help monetary policy, especially in times of deep recessions when nominal interest rates may reach their effective lower bound,' the ECB's chief economist added.
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