Martin Ellison's picture
Affiliation: 
University of Oxford
Credentials: 
Professor of economics

Voting history

ECB's quantitative easing

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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:
Disagree
Confidence level:
Confident
Comment:
The aim of the ECB asset purchase programme is to stimulate economic activity by reducing long-term yields. Evidence from QE programmes in the US and UK suggests that this will indeed happen, primarily because assets of different duration are only imperfect substitutes and investors have a “preferred habitat”. That credit risk is not fully shared, though, is likely to push interest rates up in member countries with tight fiscal positions. However, with the bulk of the risk taken on by countries that do not have stressed fiscal positions, it is reasonable to expect only a marginal reduction in effectiveness of the programme. The change in risk sharing is an undesirable side-effect, but probably insufficient to doubt the efficacy of the medicine.

Deal or no deal: The Greece standoff

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Question 3: Do you agree that implementation of the agreement will lead to an expected decrease in Greek debt repayments?

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Answer:
Agree
Confidence level:
Not confident

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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:
Confident

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Question 1:  

Do you agree that, on balance, the implementation of the agreement as outlined in media reports will have a non-trivial negative effect on Greek GDP?

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Answer:
Agree
Confidence level:
Confident

Monetary policy and the zero lower bound (ZLB)

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Question 2: Do you agree that the benefits of reforming the monetary system to allow materially negative policy interest rates outweigh the possible costs?

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Answer:
Strongly Disagree
Confidence level:
Very confident
Comment:
There are likely to be significant costs to changing the system to allow for negative policy rates, even such a change was feasible. First up, whilst the share of cash in transactions has already fallen to about half, there is considerable heterogeneity in the use of cash across different parts of the population. Part of this in generational, with my daughter almost never using cash for any payments whilst I still use cash for small to medium sized transactions. The subset of the population accustomed to using cash regularly would suffer disproportionate costs from the withdrawal of currency. Secondly, any transition to a new regime would need to be managed carefully so as not to endanger the reputation of the monetary authority. The Bank of England is already running unconventional policies on an unprecedented scale, so adding another untried and untested policy measure is questionable at this time. It would be better to fully explore the consequences and limits of Quantitative Easing before engaging in reform of the monetary system.

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