Pietro Reichlin's picture
Affiliation: 
Università LUISS G. Carli
Credentials: 
Professor of Economics

Voting history

Happiness and well-being as objectives of macro policy

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Question 1: Do you agree that subjective well-being measures, or at least some of the subindices from the typical survey measures, are now reliable enough to give useful insights when used in macroeconomic empirical analysis?

 
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Answer:
Disagree
Confidence level:
Confident
Comment:
My view is that these surveys are based on complex and heterogeneous criteria reflecting our own ethical, political value judgements as well as aspirations and transitory conditions. I am very skeptical about the meaning of an index derived from the aggregation across individuals of these type of evaluations.

The Future of Central Bank Independence

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Question 3: More generally, do you agree that it is desirable to maintain central bank independence? Again focus on the near future, say next 48 months.

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Answer:
Disagree
Confidence level:
Confident
Comment:
I don't believe that central bank independence is important in any situation, institution and political environment. Less independence of US and UK central banks have not prevented low inflation and price stability, whereas increasing the central bank independence in Italy has produced significant benefits in the nineties. Within the EMU, I think that coordination between fiscal and monetary authorities would be important, even if this may undermine some independence of the ECB.

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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:
The idea that reduced central banks independence leads to higher inflation is based on the assumption that fiscal authorities are tempted to use monetary finance. If this is going to be an issue for advanced economies in the next 48 months depend on many variables: how well high debt countries will be able to pursue fiscal consolidation and how they would respond to a (possible) spike in interest rates. Difficult to judge.

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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:
Confident
Comment:
Since 2008, the ECB objectives have expanded from inflation targeting to financial stability, prevention of speculative attacks on sovereign debt, liquidity provision to national banks in peripheral countries and quantitative easing. I see two problems with this super-activity. One is that the ECB's budget may be destabilized, creating a potential conflict with the objective of price stability. The other is that these policies have large distributional effects (creditors vs. borrowers) and they may create moral hazard. Both of these problems may put into question the benefit of the ECB independence and provide a powerful argument to those who think central banks should be subject to political supervision and control.

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:
Neither agree nor disagree
Confidence level:
Very confident
Comment:
To some extent, I agree that we cannot ignore the moral hazard induced by ECB actions in a Monetary Union, where member countries retain their sovereignty over spending and public debt. However, there are two caveats. The first is that, in my view, fiscal discipline and efforts in implementing structural reforms have gone sufficiently far after the hard lesson learned in the 2011 financial crisis. The second is that the ECB promise to raise inflation up to the 2 per cent target has not being delivered, and this imposes further limits to the solutions of the structural problems faced by peripheral economies.

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