Panicos Demetriades's picture
Affiliation: 
University of Leicester
Credentials: 
Professor of financial economics
Former Governor, Central Bank of Cyprus and ECB Governing Council member

Voting history

Should the ECB Reformulate its Inflation Objective?

Question 3: Which of the following best reflects your opinion on the following statement? “The ECB should explicitly recognize unemployment and/or economic growth as a secondary aim, secondary to its price stability mandate.”

Answer:
Strongly agree
Confidence level:
Extremely confident
Comment:
It already has! They just need to make it more clear in the Governing Council’s statements.

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

Answer:
Strongly oppose
Confidence level:
Extremely confident
Comment:
The ECBs mandate is price stability - that’s not consistent with 4% inflation. To change the mandate requires an amendment of the EU treaty which has to be a unanimous decision by member states. Not in a million years would Germany agree to that.

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:
Strongly agree
Confidence level:
Extremely confident
Comment:
I agree with the arguments out forward by Madame Lagarde. In addition, the fiscal response to the pandemic can only be maintained for as long as necessary in the knowledge that there is sufficient monetary accommodation, albeit indirectly through PEPP. It’s paramount to avoid raising taxes or tightening monetary policy before the economy recovers fully.

COVID-19 and UK Public Finances

Question 2: What is the best way to (eventually) reduce public deficits and debt?

Answer:
Perpetuities
Confidence level:
Extremely confident
Comment:
Monetary financing need not be inflationary in the current circumstances, so that’s another option I could have chosen if it was available! As the government can continue to borrow at favourable terms, perpetuities is a very good option. Any attempt to use fiscal policy Even in the future would backfire as it could derail the recovery as households and firms reduce spending in anticipation of future tax hikes or spending cuts. Consols or perpetuities offer the best alternative to monetary financing.

Question 1: How urgently should the UK government address the rise in public debt?

Answer:
Budgetary policy should not be used to address public deficits and debts in the foreseeable future
Confidence level:
Extremely confident
Comment:
Unless the war is over, it is premature to start even planning for debt reduction. The mere talk of taxation or cuts will create lobby groups against current levels of public spending and can derail the war effort. The economy will plunge into depression if the government becomes hesitant to spend during this unprecedented war. Even worse, if health spending is affected, we could be facing a very long war indeed.

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