This reflected choices in fiscal policy that were often understandable from a national perspective. But, at a European level, these choices led to an aggregate fiscal stance that was not supportive to economic recovery. Monetary policy, on the other hand, was steadily accommodative during those years, as evident from the ECB’s expanding balance sheet.
In the chart, this is shown by the solid white line. So during most of the sovereign debt crisis, monetary and fiscal policy behaved out of sync, rather than working in tandem to stabilize the economy. Now let’s look in the same chart at what happened more recently, during the Covid crisis. This time, the policy response was entirely different.