This article first appeared on Floating Path.

Over the last several years, European Central Bank (ECB) head Mario Draghi has called for expansionary measures in monetary policy (measured in deviation from neutral real interest rate). As Morgan Stanley (NYSE:MS) shows though, fiscal policy (measured in change in structural primary balance) began tightening in 2011.

Fiscal policy is expected to become more expansionary over the next few years, but remains a drag on the European economy.

Policy Stance The ECBs Shifting Economic Policy Stance

Mario Draghi