Jordi Galí's picture
Affiliation: 
CREI, Universitat Pompeu Fabra and Barcelona GSE
Credentials: 
Senior Researcher and Professor

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:
Disagree
Confidence level:
Confident
Comment:
I think it would be a serious mistake to link the degree of indepence of central banks with the (circumstantial) fact that inflation is currently below target in many advanced economies. A more expansionary fiscal policy, supported by monetary policy, would be a more suitable way to tighten labor markets and capacity and raise inflation where it needs to.

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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:
To the extent that the current "extraordinary" policy measures persist over time, and that significant decisions continue to be made involving transfers of one sort or another (e.g. bank support) central decisions may be subject to growing political scrutiny and raise legitimate concerns. In that environment there may be pressures to limit the level of central bank independence. The pressures may intensify if the central bank is perceived make a serious mistake in some front, which has not been the case until now as far as I can tell.

German Council of Economic Experts' view of ECB policy

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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:
Both inflation and unemployment in the euro area remain far from desirable levels and show few signs of improvement. So the current policy seems warranted. On the other hand, I don't think loose monetary policy by itself will be sufficient to restore growth. Instead it should be accompanied with an expansionary fiscal policy that targeted countries where underutilization of resources and deflationary pressures are more evident. Given the current high debt ratios, it would be best if the fiscal stimulus were to be financed with money creation. A response of this kind would be not only desirable but absolutely necessary if a large adverse shock were to hit the euro area while the policy rate was stuck at zero.

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:
Neither agree nor disagree
Confidence level:
Very confident
Comment:
I think it would likely help the rest of the euro area, but this doesn't necessarily imply they "should" do it.

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Question 1: Do you agree that German current account surpluses are a threat to the Eurozone economy?

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Answer:
Neither agree nor disagree
Confidence level:
Very confident
Comment:
I would not label them a "threat." Rather they may be viewed, together with Germany's strong fiscal position, as pointing to the existence of significant room to help offset insufficient aggregate demand in much of the euro area (due to weaker fiscal positions as well as the exhaustion of monetary policy ammunition). A euro-wide "policy coordinator" that cared equally about the well-being of all euro area citizens would call for a fiscal expansion in Germany. I may understand however that this is not necessarily in Germany's interest, so we shouldn't expect it under the current rules of the game (common monetary policy, decentralized fiscal policy).

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