John Hassler's picture
Affiliation: 
Institute for International Economic Studies (IIES), Stockholm University
Credentials: 
Professor of Economics

Voting history

The Eurozone COVID-19 Crisis: EU Policy Options

Question 2: What is the best mechanism to pay for economic support provided by and to EU member states to combat the COVID-19 crisis?

Answer:
Joint borrowing by member states (e.g. Coronabonds)
Confidence level:
Confident

Question 1: What is the total size of funding that you would advocate at the EU level in support of its members to weather the COVID-19 crisis this year?

 

 

Answer:
10-20% of GDP
Confidence level:
Very confident
Comment:
Dealing with the Pandemic is a European public good. This is both because of the borderless nature of Covid-19 and because mitigation of the economic consequences in one country is good for the rest of the union. In contrast to most other crises, there are few or any direct moral hazard issues involved. This speaks strongly in favor of mutualization of costs of dealing with the crisis. To make for a swift agreement on this, countries that are likely to be net donors should accept so and those likely to be net recipients should be willing to accept some conditionality regarding future dealing with excessive public debts.

Bitcoin and the City

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Question 2: Do you agree that the regulatory oversight of cryptocurrencies needs to be increased?

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Answer:
Disagree
Confidence level:
Not confident
Comment:
I think there is a risk that regulatory oversight may create a perception that cryptocurrencies are legitimate investments. They should not be perceived like that. The value of regulation is currently low and therefore I think it should not be done.

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Question 1: Do you agree that cryptocurrencies are currently a threat to the stability of the financial system, or can be expected to become a threat in the next couple of years?

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Answer:
Strongly disagree
Confidence level:
Confident
Comment:
Surely the valuation of Bitcoin reflects bubbly expectations. Such assets are a threat to financial stability provided i) they are sufficiently bug and ii) they are held by institutions that are sufficiently leveraged so that default is translated into losses in other parts of the financial system. Both conditions are necessary for cryptocurrencies being a threat to financial stability. It is quite unlikely that they will be met in a couple of years.

Global risks from rising debt and asset prices

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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:
Confident
Comment:
For three decades, real save interest rates have fallen globally. The total fall is in the order of 4-percentage points and the negative trend has nothing to do with monetary policy. Lower real rates necessarily leads to higher equilibrium asset prices and larger balance sheets. Furthermore, lower real rates leads to a higher sensitivity of net worth to variations in the factors that drive fundamental asset values. Most likely this leads to higher aggregate risk. The driving force behind this is largely beyond the control of governments and central banks. What needs to be done, however, is to better allocate the risks that a low interest rate society brings with it. In many countries, young households have to bear a to large risk because of ill-functioning housing markets and underdeveloped markets for risk sharing.

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