Morten Ravn's picture
Affiliation: 
University College London
Credentials: 
Professor of economics
Head of Department

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:
Neither agree nor disagree
Confidence level:
Confident
Comment:
If I am right above, we won't see much change so it will be impossible to answer the question. But I believe the traditional argument about the relationship between central bank independence and inflation. There might be counter examples to this, but they are counter examples in my opinion.

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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:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
Carney has been under a lot of pressure in the UK but has withstood the fire quite well and I think it would be difficult for UK policy makers to intervene directly or change the charter of the Bank of England. Such intervention would be associated with substantial loss of credibility. But, on the other hand, the circumvention of the fiscal rules in the UK did not get much press and is ignored by both economists and the press. So perhaps I overestimate credibility losses. The situation for the ECB is less clear although I think it is unlikely that there will be direct political intervention in the ECB's business. But, who knows? It is very hard to make forecasts especially about the future (Niels Bohr). Things are very uncertain at the moment. We don't know how Brexit will play out, what will happen in the US, and the fate of major European economies such as Italy and France. So, I would not totally eliminate the possibility that changes are coming but I think it is unlikely given the political costs from doing so.

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:
Very confident
Comment:
I agree on this. There are clear needs for structural policies to address the disappointing state of many economies where high levels of youth unemployment has effectively sacrificed a generation since the financial crisis, where inequality is high, and where wage and price adjustments are very sluggish. Loose monetary policy cannot substitute for reforms.

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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:
Agree
Confidence level:
Confident
Comment:
The difference in performance between the northern and southern parts of the Euro area cannot be corrected for by loose monetary policy neither can low growth. There is a need to use other policies and probably also to consider whether there is a need for cross-Euro-area transfers. If monetary policy is tightened, it would be important, however, to keep an eye on the state of some of the larger financial institutions in Europe.

German current account surpluses

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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:
Confident
Comment:
I think the right questions surround how most effectively to address the poor state of many southern European economies. It is far from clear that a German stimulus is the most appropriate instrument in this dimension given that only a share of higher German demand would directly impact on southern Europe. The most fundamental issues to be addressed concern the high incidence of unemployment in southern europe and the state of the financial sector. Current policies are sacrificing younger generations' life opportunities and this has to be addressed with some urgency. It is not clear to me that a German stimulus is the solution to this.

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