Research on the Impact of Eurozone Monetary Policy on EU Economic Growth

Abstract

The Greek government-debt crisis is a representative topic that shows the inflexibility of the monetary policy of the ECB and how it can harm the Greek economy in considering different economic conditions. The inflexibility of monetary policy shows the disadvantages of a one-fits-all solution carried out by the ECB in EU 27 and EU15. This study aims to analyze the impact of eurozone monetary policy on its member states and to what extent the inflexibility of monetary policy can be detrimental to a states economic growth and price stability. The empirical test and case study are carried out for further analysis, and the results indicate the important role of inflexible monetary policy in the case of the Greek government-debt crisis and its further impact on the steady economic growth of Germany. The ECBs monetary policy is revealed to be volatile and uncertain, which brought undesirable economic growth outcomes for the Eurozone. However, considering the complexity of integrated monetary union and the previous case of Greece, exiting the Eurozone is not the best solution to recover economic growth.