THE IMPACT OF THE MONETARY - FISCAL POLICY MIX ON INVESTMENTS OF EURO AREA COUNTRIES IN THE CONTEXT OF THE FINANCIAL CRISIS

During the financial crisis it was observable, significant increase in budgetary expenditure in the euro area. This was associated with an increase inter alia in public investment expenditure. Fiscal authorities trying to stimulate the economy have decided to increase spending to inhibit the effects of the financial crisis such as the decline in investment, employment and overall GDP in the euro area. Also, the monetary authorities cutting interest rates to the lowest levels in history, aimed at encouraging businesses to borrow and invest. However, the financial crisis is causing too much uncertainty in the financial markets, causing aversion of entities to borrow, invest, increasing spending. Thus, the level of investment in the economy has been significantly reduced. Gross fixed capital formation of businesses fell up to about - 20% of GDP. During the financial crisis, despite a coordinated fiscal and monetary policy in the euro zone, the economic authorities did not prevent EMU, before a significant decline in investment and economic activity. However, it should be noted that without the ECB's anti-crisis measures and the fiscal authorities the recent financial crisis could even lead to the collapse of the euro zone.