The ECB alone cannot work miracles, a tangible intervention by individual governments is needed through public investments that revitalize the economy of individual states. This is the summary of the latest report by Ref, the economic and financial research center in Milan. The Eurozone has been growing slowly for two years and the prospects for the future are increasingly uncertain, while the economic policy pursued in recent years has had only one protagonist: Mario Draghi, former Governor of the European Central Bank for a month.
“Governments have done little, partly because they lack the fiscal space to support demand, and partly because the (few) countries that could adopt expansionary measures do not seem willing to do so. Yet from the ECB itself the message has come clear: monetary policy gave its all and without the help of Governments it might not be able to raise demand and bring inflation expectations back close to the targets”, explains the research by Ref.
In practically every press conference held between 2011 and 2019, Mario Draghi repeated the same thing: “Governments must do their part”. A mantra that has remained unheard until today and has become the subject of a debate involving not only the measures to be implemented but also the "possible revision of the rules in order to widen the spaces for expansive measures even in countries that currently do not have the margins for measures discretionary".
Among the hypotheses in the field, there is also the golden rule, budgetary rule according to which public investments can be separated from the calculation of the deficit for the purposes of compliance with the stability pact between the member states of the European Union. The application of the golden rule makes it possible to boost public investment "which in recent years has been more affected by the difficulties of public budgets and the preference of governments for current spending", continues the research.
"Even in Italy we should then be able to reactivate the public investment machine – comments Ref – The short-term goal of supporting aggregate demand and the opportunity to finance investments at very low interest rates must not, however, make us lose sight of the primary need which is to provide the country with infrastructure appropriate. The productivity of the public capital stock is linked to the complementarity with respect to the private capital stock. The ability to select investment projects, to complete them in a reasonable time and without improper cost increases is fundamental”.
