What if ECB reverted to its past behaviour in 2020?

An econometric analysis shows that the ECB’s behaviour has diverged from the past since 2016. If the new leadership in 2020 returned the ECB to its pre-2016 behaviour, the euro repo rate would immediately be hiked by 250 to 350 basis points. But such a hike is highly unlikely, given that: Debt has risen very sharply since the crisis and higher interest rates would trigger a debt crisis; Central banks’ preferences have undoubtedly evolved, as policymakers now reject any policy that could destroy growth or employment; The restrictive bias in Germany’s fiscal policy needs to be offset .