Ethan Ilzetzki's picture
Affiliation: 
London School of Economics

Voting history

China’s growth slowdown: likely persistence and effects

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Question 2:

Do you agree that if the Chinese slowdown turns out to be persistent, it will have a significant impact on UK growth (say, in the order of a few tenths of a percentage point) and/or it will justify a material change in monetary policy (for example, in terms of the timing and speed of a return to ‘normal’ interest rates) and fiscal policy (for example, in terms of the timing and speed of fiscal contraction).

Answer:
Neither agree nor disagree
Confidence level:
Not confident at all

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Question 1:

Do you agree that the Chinese economy is likely (say more than 50% probability) to maintain in the medium term (say, for at least ten years) a rate of annual growth exceeding 6%.

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Answer:
Disagree
Confidence level:
Not confident at all

ECB's quantitative easing

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Question 2:

Do you agree that the structure of the ECB's QE programme makes the Eurozone more fragile and increases the risk of one country leaving the euro?

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Answer:
Agree
Confidence level:
Confident

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Question 1:

Do you agree that the design of the ECB's QE programme reduces its effectiveness? 

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Answer:
Agree
Confidence level:
Very confident
Comment:
To answer this question one needs first to consider purpose QE might serve. My view is that QE works because it might reduce longer-term or riskier market interest rates when short-term risk-free interest rates have hit the zero lower bound. In this respect, the purchases of German and French sovereign debt--whose returns have been close to zero throughout the crisis, is trading cash for what is being priced as a perfect substitute. (If anything, the market is signalling that there is a shortage of core-Eurozone bonds.) Thus a large part of the purchases serves no purpose. The risk-sharing agreement itself has two disadvantages. The first, indicated in the question, is that it might reduce the risk premium on periphery Eurozone sovereign debt by less than it otherwise would. This is probably true on the margin, but this would have been priced in to yields by now. With yields of periphery Eurozone sovereign debt around 2%, the market shows no indication of this concern. My greater concern is the signal this sends for the medium-term viability of the Euro. What does it signal to the world when ECB policy is explicitly designed to insure core-Eurozone countries against risks that are only relevant if the Euro collapses? If the EU is not willing to bet on its survival, who should?

Deal or no deal: The Greece standoff

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Question 2: Do you agree that Greece would be better off defaulting right now rather than signing to the agreement under consideration?

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Answer:
Disagree
Confidence level:
Not confident
Comment:
An outright Greek default on the IMF might unleash an economic hurricane on Greece and is a very risky strategy.

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