Stefan Gerlach's picture
Affiliation: 
BSI Bank
Credentials: 
Chief Economist

Voting history

Global risks from rising debt and asset prices

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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?

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Answer:
Agree
Confidence level:
Confident
Comment:
Monetary policy, in the form of lower interest rates, works by increasing asset prices and stimulating interest-sensitive spending, in particular on private and commercial real estate. If a sharp economic contraction occurs and central banks respond by cutting interest rates sharply, we would expect to see rising stock and property prices, and rising bank lending. Much of what commentators now worry about are thus the predictable effects of expansionary monetary policy -- this is how monetary policy works. That said, rising wealth inequality is a serious problem that strikes at the heart of social cohesion, but one that is best tackled by income redistribution through the tax system. The idea that monetary policy should worry about income inequality is misguided.

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Question 1: Does the world economy face heightened risks arising from an excess of public and private debt and/or inflated asset prices?

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Answer:
Agree
Confidence level:
Very confident
Comment:
There are clear risks emanating from the very high level of debt, in particular of public debt. It is difficult to see, from a long-run historical perspective, how the debt-to-GDP ratio can be reduced to a more comfortable level. Debts were very high after the end of WW2, but melted away as a consequence of rapid growth, high and unexpected inflation, and financial repression. These factors are unlikely to play the same role now.

Wages and economic recoveries

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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:
Agree
Confidence level:
Confident
Comment:
Differences in real wage growth appear to reflect a combination of the need for labour market adjustment in different countries, coupled with the ability of national labour markets to deliver that adjustment, that is, their flexibility.

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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:
Neither agree nor disagree
Confidence level:
Confident
Comment:
While the UK does have more flexible labour markets than most of the euro area, the different behaviour of inflation is also important.

Happiness and well-being as objectives of macro policy

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Question 2: Do you agree that quantitative well-being analysis should play an important role in guiding policy makers in determining macroeconomic policies?

 
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Answer:
Neither agree nor disagree
Confidence level:
Confident

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