Sean Holly's picture
Affiliation: 
Cambridge University

Voting history

Wages and economic recoveries

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Question 2: Do you agree that the different behaviour of UK real wages relative to Eurozone wages during the Great Recession is in large part due to the UK having different labour market policies?

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Answer:
Agree
Confidence level:
Confident

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Question 1: Do you agree that lower real wage growth was beneficial for employment levels during the Great Recession?

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Answer:
Strongly agree
Confidence level:
Confident

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:
Agree
Confidence level:
Very confident

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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:
Strongly disagree
Confidence level:
Extremely confident
Comment:
According to the Maastricht Treaty "…neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies, from any government of a Member State or from any other body." Any such revision of the Treaty would require the agreement of all EU members, not just those part of the Euro Area. This is not going to happen over the next 4 years. The EU has enough (non-Brexit) issues to worry about. However, the case of the UK is a different matter. An Act of Parliament revoking Bank of England operational independence could go through Parliament in an afternoon. The question then is, who would determine monetary policy? Dincer and Eichengreen (2014, IJCB) using the Eijffinger and Geraats definition of the degree of transparency find that the more transparent a central bank is, the lower the variability of inflation. But there is no reason way an independent and transparent monetary policy should be decided by the central bank itself. From 1992 the UK followed inflation targeting but the actual decision about the stance of monetary policy was decided by HM Treasury with the Bank of England then required to use open market operations to bring this into effect. Only in 1997 was the Bank of England given operational independence. The question is however, would HM Treasury really want to be subject to the kinds of transparency that the Bank of England is obliged to follow in order to make the Bank more accountable? The transparency genie has been let out of the bottle. There can no longer be a return to old-fashioned monetary mystic. We could retain independence without decisions being made by the central bank. The central bank could take instructions from an independent Monetary Policy Committee.

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:
Confident

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