Costas Milas's picture
Affiliation: 
University of Liverpool
Credentials: 
Professor of Economics

Voting history

The Future of Central Bank Independence

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Question 2: Do you agree that the traditional argument that less central bank independence leads to higher inflation will (still) be relevant over the next 48 months in Western economies?

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Answer:
Agree
Confidence level:
Confident

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Question 1: Do you agree that central bank independence in the Eurozone and the UK will decline over the next 48 months?

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Answer:
Disagree
Confidence level:
Confident
Comment:
I disagree because Central Bank independence has already declined dramatically in Europe. Why is that? For almost 4 years now (since January 2013), we have been witnessing a massive (and repeated) undershooting of ECB’s inflation target. ECB’s latest projections reveal that its inflation target won’t be “hit” even by…2019. Such spectacular target undershooting for as many as six years(!) would have definitely called for replacing the boss in any other high profile job! That said, the long-lasting target undershooting should not necessarily call into question ECB’s ability to deliver on its mandate. Rather, mainly triggered by lack of political consensus (that is, German policy-makers versus the “rest”), it calls into question ECB’s willingness to “hit” its target. This is exactly the reason why Central Bank independence is almost dead in Europe.

German Council of Economic Experts' view of ECB policy

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Question 2: Do you agree that the ECB's monetary policy masks structural problems of member states?

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Answer:
Agree
Confidence level:
Not confident

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Question 1: Do you agree that exceptionally loose monetary policy by the European Central Bank is no longer appropriate?

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Answer:
Disagree
Confidence level:
Very confident
Comment:
With inflation consistently under-shooting the target for more than 3 years now it is really difficult to agree with the German experts. In fact, the inflation survey forecasts (from the ECB website) indicate that inflation will still be below the target (at 1.8%) in five years...

German current account surpluses

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Question 2: Do you agree that the German government should increase public spending given its persistently large current account surplus and given that it is part of the Eurozone?

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Answer:
Agree
Confidence level:
Not confident
Comment:
Yes, but (of course) there is no mechanism to force Germany to do so. The EU Treaty talks about 'corrective' fiscal measures when the deficit exceeds 3% of a country's GDP. There is no similar mechanism in case of a (relatively) big fiscal surplus. This is unfortunate because the IMF expects Germany to be the only EU country which will retain a fiscal surplus by as much as 0.59% of GDP by...2021.

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