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JOURNAL OF INTERDISCIPLINARY RESEARCH

asset bubble that triggered the financial crisis of 2008 central
banks took no account of the zero-bound interest rates’ influence
on the natural interest rate.

The recent financial crisis showed many countries’ preference to
seek solutions to their problems in traditional Keynesian
solutions designed to stimulate economies. Interestingly, despite
the long-standing promotion of monetarist thought and new
classical macroeconomics many governments still find
interventionist tools, such as an expansionary fiscal policy, to be
useful.

P. Krugman argues that a fiscal stimulus spurring the

economy helps create new jobs and that the reduction of the
budget deficit slows down economic growth in the short term.
He also concludes that in the face of a financial crisis a
government in charge of an economy with near-zero interest
rates should increase public expenditures (to illustrate his point,
P. Krugman refers to the Great Depression that was defused in
the US by rapidly increasing government spending).

According to J.

Działo, a restrictive fiscal policy seems a better

option, as it gives the monetary authorities more freedom in carrying
out a loose monetary policy. In some cases, however, such as an
economic crisis, an expansionary fiscal policy can prove useful. The
discretionary, anti-cyclical measures of the fiscal authorities have the
potential for mitigating the negative impacts of recession, such as
mass bankruptcies and fast-rising unemployment (usually at the cost
of higher public deficits and debts).

3 Analysis of dependencies between instruments of policy
mix and real economy

This part presents statistical data concerning instruments of
monetary and fiscal policy e.g. the ECB official interest rate, a
rate of inflation, money supply M3 in the euro area as well as
deficit and debt of general government sector (GG) and GDP
growth. Moreover, the results of regression between such
variables as interest rate, inflation, GG deficit, GDP growth or a
real GDP value were presented.

Table 1 shows the levels of the main (official) interest rates set
by the central bank in the euro area (the main refinancing
operation rate), between 1999 and 2016.

Because the rates were

frequently changed over a year, the table presents their annual
arithmetic means. Moreover, table 1 shows HICP inflation rate
as an annual average rate of change (2015=100) as well as Broad
Money (M3) Index (2010=100) in the euro area between 1999-
2016.

Table 1 Main interest rate of ECB, inflation (HICP) and Broad
money index (M3) in euro area

Year

Main refinancing

operation rate ECB

(%)

Inflation (HICP)
in euro area (%)

Money supply
Index (M3 )in

euro area

1999

2,90

1,1

48,7

2000

4,04

2,1

51,5

2001

3,94

2,3

55,7

2002

2,75

2,2

59,7

2003

2,25

2,1

64,3

2004

2,00

2,1

2005

2,25

2,2

73,1

2006

3,00

2,2

79,4

2007

3,88

2,1

88,2

2008

3,44

3,3

97,4

2009

1,44

0,3

101,1

2010

1,00

1,6

100

2011

1,25

2,7

101

2012

0,75

2,5

103,7

2013

0,38

1,4

105,7

2014

0,10

0,4

107,5

2015

0,05

114

2016

0,00

0,2

119,6

Source: based on [Eurostat, OECD].

CIŻKOWICZ P., RZOŃCA A.: Interest rates close to zero, post-crisis restructuring

and natural interest rate, “Prague Economic Papers”, No.3, 2014.

KRYŃSKA E., KWIATKOWSKI E.: Polityka państwa wobec rynku pracy. Idee

ekonomiczne i rzeczywistość, „Polityka Społeczna” No. 5-6/2010, 2010, 6 p.

KRUGMAN P.: End the depression now!, 2012 [in:] http://natemat.pl/20625,nobl

ista-paul-krugman-wzywa-zakonczcie-ten-kryzys-teraz (access: 19.11.2017).

DZIAŁO J.: Dlaczego trudno jest prowadzić “dobrą” politykę fiskalną?,

„Gospodarka Narodowa” No. 1 – 2, 2012, 36 p.

In the analysed period the ECB main interest rate was at a
relatively low level. It increased only in more than 3% between
2000-2001 as well as 2007-2008, which mostly reflected an
economic slowdown and the last financial crisis that also
influenced a level of inflation. Inflation in the euro area between
1999-2016 only in 2008 exceeded 3.3%, whereas in other years a
rate of inflation oscillated around 2% (inflation target in euro
area is below 2%). It was observed that between 1999-2016
money supply M3 in the euro area was rising steadily (the lowest
growth was noted between 2009-2011) .

Table 2 shows the 1999-2016 real GDP growth rate for the euro
area (as percentage change on previous year), General
Government (GG) deficit (as percentage of GDP) and debt
(government consolidated gross debt percentage of GDP) in euro
area.

Table 2 GDP growth, GG deficit and debt in Euro Area in the
1999-2016

Year

GDP growth rate in

Eurozone

GG deficit in euro

area (% GDP)

GG debt in

euro area (%

GDP)

1999

-1,5

70,6

2000

3,8

-0,3

68,1

2001

2,1

-2

2002

0,9

-2,7

66,9

2003

0,6

-3,2

68,1

2004

2,3

-3

68,4

2005

1,6

-2,6

69,2

2006

3,2

-1,5

67,3

2007

2,9

-0,6

64,9

2008

0,4

-2,2

68,6

2009

-4,4

-6,3

78,4

2010

2,1

-6,2

83,8

2011

1,6

-4,2

86,1

2012

-0,9

-3,6

89,4

2013

-0,3

-3

91,3

2014

1,3

-2,6

91,8

2015

2,1

-2,1

89,9

2016

1,8

-1,5

88,9

Source: based on [Eurostat, OECD].

Between 1999-2016 GDP in the euro area dropped significantly
during the last financial crisis of 2008-2009 as well as in the
period of so-called public debt crisis. As a result of the last
financial crisis GG deficit and GG debt also increased, which
affected GDP in the euro area.

Below, a regression analysis of the selected variables is
presented.

It aimed to find out which dependencies between

instruments of policy mix and real economy indicators in euro
area were statistically significant in the years 1999-2016

testing a null hypothesis H

(the variables’ parameters are not

significant) and an alternative hypothesis H

(the parameters are

significant).

The variables were checked for stationarity with the

use of the ADF test (the Dickey–Fuller test). Variables that were
non-stationary at their levels

were transformed into first

differences, yielding stationary series. The necessary data were
obtained from the Eurostat and OECD.

Table 3 contains the regression results for the euro area. The
independent variables were the nominal main ECB interest rate
[IR_ECB] and the nominal main ECB interest rate lagged by one
year [IR_ECB_1]; the dependent variable was the first
differences of the inflation rate (HICP) in the euro area

[d_INF_EUR].

Table 3 The dependent variable (Y): d_INF_EUR; independent
variables (X) – IR_ECB and IR_ECB_1

Variable

name

Coefficient

Standard

error

t- Student

p-value

Const

−0,123662

0,401645

−0,3079

0,7627

IR_ECB

0,827430

0,301489

2,744

0,0158 **

IR_ECB_1

−0,725742

0,317381

−2,287

0,0383 **

Selected regression statistics and analysis of variance; n=17 observations from

2000-2016

http://ec.europa.eu/eurostat/web/national-accounts/data/main-tables;

http://stats.oecd.org/index.aspx?querytype=view&queryname=170#
(access: 10.11.2017).

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