Nezih Guner's picture
Affiliation: 
Universitat Autònoma de Barcelona
Credentials: 
Professor of Economics

Voting history

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:
Strongly agree
Confidence level:
Confident
Comment:
The ECB is trying to use monetary policy to influence the economic activity in the whole Euro area, despite significant differences among member states in fiscal policy, labor markets and social policy. Without further coordination and integration of such policies and real economic activity, the effects of monetary policy will be short-lived and can indeed limit the willingness of members states to face reforms. A coordinated effort to push structural reforms in member states might be the only option to make the Euro area more resistant to shocks in the long run, since a push for more integration in fiscal policy, labor markets and social policy does not seem to be on the political agenda at this moment.

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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

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:
Confident
Comment:
I think this will depend critically on the type of public spending. Public spending on investment incentives or infrastructure, for example, can further enhance the productivity advantage of German economy and can very well make the situation worst. The same might also be true for public spending that will enhance the flexibility of the labor market (such as child-related transfers). On the other hand, spending on housing or transfers to retired, cash or in-kind, might have a stronger effect on domestic demand and lower the savings rate.

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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:
Disagree
Confidence level:
Confident
Comment:
I think German current account surpluses partly reflect positive supply shocks (such as labor market reforms that lowered wages and made German economy more competitive) and the current demographic structure that results in high savings rates. While the short term need for stronger demand from Germany to boost the Eurozone economy is clear, since the causes of German current account surpluses are more structural, they can only be addresses in the medium run. Furthermore, I think the challenge is to find economic mechanisms to handle such imbalances within a currency union. This will most probably will require further coordination of fiscal and labor market policies within the Eurozone and signalling Germany as a threat can slow down (rather than speeding up) establishing such mechanisms.