Jagjit Chadha's picture
Affiliation: 
National Institute of Economic and Social Research
Credentials: 
Professor of economics

Voting history

The Future of Central Bank Independence

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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:
Agree
Confidence level:
Not confident
Comment:
I think it is a risk that because of a perception of poor economic performance and the increasing role of central banks in bank regulation, as well as clear involvement in fiscal policy through extraordinary monetary policies that the framework for independence in the operation of monetary policy will have to be rethought. One the central bank gets involved in more than objective, trade-offs may start to appear and some discussion on the social welfare function may be needed. (I considered some of these issues in this piece last month: http://www.niesr.ac.uk/blog/friday-flyer-dependence-day-old-lady#.WFZ7tGKLRdg)

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:
Disagree
Confidence level:
Confident
Comment:
Structural problems simply cannot be addressed by aggregative monetary policy they are more likely to exposed by them because there are such differences in regional composition of the aggregate.

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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:
Confident
Comment:
Actually policy could be tightened somewhat and still be exceptionally loose by historical standards. So I interpret the questions as asking whether the process of normalisation ought to begin and as a corollary whether markets ought to start preparing for some exit from balance sheet policies and a return to positive interest rates. I think it is still a little early to reserve the policies but it is not too early to explain the conditions under which policy normalisation might occur. We need to start by clarifying the target for the ECB of being close too but below 2% inflation, which is both asymmetric and suggests a negative inflation bias. A simple 2% target with 1% bands would be a start.

Are academic economists ‘in touch’ with voters and politicians?

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Question 7: Voters did not know that there was near-unanimity among economists.

Do you agree that this was an important reason for a majority of UK voters going against the near unanimous advice of the economics profession?

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Answer:
Neither agree nor disagree
Confidence level:
Confident

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Question 6: Economists did not explain the reasons for this consensus in sufficiently clear language.

Do you agree this was an important reason for a majority of UK voters going against the near unanimous advice of the economics profession?

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Answer:
Neither agree nor disagree
Confidence level:
Confident

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