[Figure 5]  Figure 5. Monetary and ﬁscal policy in the euro area were misaligned  The following chart illustrates the lack of coordination between monetary and fiscal policy in the euro area during and after the European sovereign debt crisis. The bars show the change in the primary budget balance as a percentage of potential output for the euro area as a whole.
Positive numbers indicate a discretionary fiscal tightening, negative numbers indicate fiscal loosening. The red bars indicate the years when fiscal policy was procyclical and green bars the years in which fiscal policy was countercyclical. While fiscal policy was initially countercyclical during the global financial crisis, it turned procyclical during much of the European debt crisis.