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[answered] Back to previous page document 1 of 1 OECD Calls On Europe


Hello, please help with the summary of the article, roughly 300 words, as well as briefly explain the author's purpose for writing the article. Thanks! I'm attaching the text of the article. The topic is expansionary monetary policy.

  1. In a double-spaced document, briefly explain the author?s purpose for writing the article. One way to understand the author?s purpose is to ask yourself why he or she wrote it. (For example, consider current and future events, politics, or anything else that may have inspired the article.)
  2. Summarize the article, focusing on the discussion of the topic the article addresses. Incorporate relevant economic theory that is present so that discussion of the article content is clear.



Back to previous page document 1 of 1 OECD Calls On Europe to Loosen Monetary Policy

 

Horobin, W. (2013, Mar 28). OECD calls on europe to loosen monetary policy. Wall Street Journal (Online) Retrieved from http://ezproxy.liberty.edu/login?

 

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28&volume=&issue=&spage=&author=Horobin%2C+William Abstract

 

PARIS??The world's leading central banks should maintain or strengthen expansionary monetary policy to support their economies, even as there are risks of asset?price

 

bubbles, the Organization for Economic Cooperation and Development said. Full Text

 

PARIS??The world's leading central banks should maintain or strengthen expansionary monetary policy to support their economies, even as there are risks of asset?price

 

bubbles, the Organization for Economic Cooperation and Development said.

 

"Given limited fiscal space in most OECD countries, monetary policy remains a key instrument for supporting demand," the OECD said Thursday in its interim assessment of the

 

Group of Seven leading economies.

 

There is a risk of investor sentiment getting ahead of fundamentals and of monetary policy encouraging excessive risk?taking, the OECD said. But low inflation in most major

 

economies means exceptional measures can and should remain in place, or be pursued further, it said.

 

The OECD's recommendation comes as advanced economies continue to grapple with bringing down their deficits and debt against a backdrop of weak or contracting economic

 

output. Growth is struggling particularly in the euro zone, where the OECD expects France and Italy to have contracted in the first three months of 2013. Italy will continue to

 

contract to the end of June, the limit of the OECD forecasts.

 

Stronger growth in Germany will help the three largest euro?area economies expand as a group, but only slowly, with 0.4% annualized gross domestic product growth in the

 

first quarter and 1.2% in the second, the OECD said. U.K. growth is expected to be similarly weak at 0.3% and 1.3% over same period.

 

The U.S., by contrast, is set to grow 3.5% and 2% in the first and second quarters, and Japan 3.2% and 2.2%, according to the forecasts. Emerging economies are even

 

further ahead??annualized growth in China will be well above 8% throughout the first half of 2013, the OECD said.

 

"We are obtaining stronger figures from the U.S. and definitely stronger figures for Japan. Germany is stronger, although the same cannot be said for the other two euro?area

 

countries we have numbers for," the OECD's chief economist, Pier Carlo Padoan, said in an interview.

 

While efforts to rein in finances should continue, countries should let automatic stabilizers such as unemployment and welfare benefits play a full role in absorbing some

 

weaknesses in demand, the Paris?based organization said.

 

Central banks should act to support the process of fiscal consolidation amid weak growth, the OECD urged. "Monetary policy must provide support to activity to compensate the

 

drag that comes from fiscal consolidation," Mr. Padoan said. The OECD in particular pushed the ECB, whose primary mandate is price stability, to be more active, as demand is

 

weak in the euro area and inflation is well below the central bank's target.

 

As well as having room to reduce its main refinancing rate from 0.75% currently, the ECB could give more guidance on keeping rates low and consider expanding quantitative

 

easing, the OECD said.

 

"There is more space for expansionary traditional monetary policy, and maybe some aggressive policy in other instruments," Mr. Padoan said.

 

In Japan, the OECD welcomed the looser monetary policy with an inflation target at 2% and said there should be more asset purchases, especially of long?term government and

 

corporate bonds.

 

In the U.S., Mr. Padoan said monetary policy should also continue to ease. But the need for further exceptional measures is waning.

 

"The point where the costs of further quantitative easing outweigh the benefits is likely to be within sight," the OECD said in its report.

 

Mr. Padoan urged the U.S. authorities to be watchful of price distortions and excessive risk taking as a result of loose monetary policy. Equity prices have surged in its members' economies, the OECD said, and the yields on corporate and sovereign debt??which move in the opposite direction to prices??have

 

fallen. This is related to a perception of lower risk, but also the supply of abundant liquidity by central banks, Mr. Padoan said.

 

There is a particular risk in the corporate sector of asset prices getting out of line with economic fundamentals as investors look for places to park liquidity.

 

"There is an issue of why the euphoria in financial markets does not translate into real activity," Mr. Padoan said.

 

Write to William Horobin at

 

Credit: By William Horobin

 

(c) 2013 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission. Details

 

Subject Central banks? Monetary policy? Studies? Economic models? Consolidation? Sovereign debt? Gross Domestic Product??GDP Location United States??US? Japan? Germany? Italy Company / organization Name:

 

NAICS: Organization for Economic Cooperation & Development

 

928120? Name:

 

NAICS: Group of Seven

 

926110 Title OECD Calls On Europe to Loosen Monetary Policy Author Horobin, William Publication title Wall Street Journal (Online) Pages n/a Publication year 2013 Publication date Mar 28, 2013 Section World Publisher Dow Jones & Company Inc Place of publication New York, N.Y. Country of publication United States Publication subject Business And Economics Source type Newspapers Language of publication English Document type News ProQuest document ID 1321132328 Document URL http://ezproxy.liberty.edu/login?

 

url=http://search.proquest.com.ezproxy.liberty.edu/docview/1321132328?accountid=12085 Copyright (c) 2013 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further

 

reproduction or distribution is prohibited without permission. Last updated 2013?04?01 Database ProQuest Central Bibliography

 

Citation style: APA6

 

Horobin, W. (2013, Mar 28). OECD calls on europe to loosen monetary policy. Wall Street Journal (Online) Retrieved from http://ezproxy.liberty.edu/login?

 

url=http://search.proquest.com.ezproxy.liberty.edu/docview/1321132328?accountid=12085 Copyright ? 2016 ProQuest LLC. All rights reserved. Terms and Conditions

 


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