Francesca Monti's picture
Affiliation: 
Kings College London

Voting history

Should the ECB Reformulate its Inflation Objective?

Question 2: Would you support increasing the ECB’s inflation target to a higher rate of inflation than the current 2% target?

Answer:
Support
Confidence level:
Confident
Comment:
The question is whether the benefits brought about by a higher inflation target are bigger than the costs of having higher inflation in normal times. But while the costs of inflation are still very debated (e.g. see Nakamura et. al QJE 2018), the advantages of a higher inflation target in a world of lower interest rates are more clear, specifically the ability to operate with conventional policy tools when faced with a downturn. What is more difficult to assess is whether such a change in strategy could be credibly implemented and would be well understood by the actors in the economy.

Question 1: Which of the following best reflects your opinion on the following statement? “The ECB should explicitly state that it will allow inflation to temporarily exceed the 2% target following extended periods of low inflation.”

Answer:
Agree
Confidence level:
Very confident
Comment:
There is evidence that the natural rate of interest has fallen in the last decade, implying that the likelihood of reaching the effective lower bound, where the available policy tools are less effective, is higher. Also, inflation seems to have been less responsive to slack in recent years, impinging on the policymakers ability to control inflation. The makeup strategy implied by the statement in Question 1 would help policymakers in the current context, because it would make the current low-for-longer policies more credible (because implicit in the strategy), and therefore more effective. It would also help to ensure that inflation expectations are more closely aligned to the target.

The Economic Cost of School Closures

Question 3: To what extent will school closures increase gender inequality due to unequal gender distribution of the burden of school closures?

Answer:
To a small degree but persistently
Confidence level:
Very confident
Comment:
The burden of school closures is certain to affect women disproportionately. Women are often the main carers of children and will probably already have done choices that put them in the position of being the element in the household who can absorb the additional caring responsibilities. The effect of further disengagement from the labour force is sure to affect their career prospects permanently. On the other hand, the pandemic has normalised teleworking, and this could, in the medium run, have positive effects on the sharing of caring responsibilities.

Question 2: To what extent will school closures increase inequality in human capital development?

Answer:
To a small degree but persistently
Confidence level:
Confident
Comment:
The effects of school closures will presumably be felt disproportionately more by children of lower socio-economic background: their schools have offered less online teaching, they have been less able to take advantage of such offering, when it was available, because of constraints on the technology needed (e.g. unavailability of devices or internet in the household), their parents might have had less time and/or knowledge to support them in their learning. Even if the effects on each child's educational attainment are small, the differences across students will be exacerbated and, I believe, these differences will be persistent.

Question 1:What damage will school closures have on economic growth over a 10-15 year horizon?

Answer:
Moderate
Confidence level:
Not confident
Comment:
School closures affect economic growth in two main ways: by reducing children's educational attainment (disproportionately for lower income households) and by affecting persistently the carrier prospects of the main carers of children (generally women). The mapping from little fluctuations in standardised tests scores into aggregate economic outcomes is not that obvious however. The effect coming from the disruption of the carriers of the main carers seems to me to be more clear cut.

Pages