Question 2: Which of the following is the best way to address the impact of rising energy costs on household finances?
Answer:
Conditional/targeted transfers
Confidence level:
Extremely confident
Comment:
Targeted transfers are fairer and also reduce the burden on the taxpayer.
Question 3: Should a windfall tax be used to (fully or partially) finance support to households?
Answer:
Yes
Confidence level:
Extremely confident
Comment:
A windfall tax is by definition not distortionary. It’s also fair and reduces the need for the government to borrow, easing pressure on interest rates and monetary policy.
Question 1: Overall, which of the following best characterises how the government’s proposed energy policies will leave the average UK household over the medium term:
Answer:
Worse off
Confidence level:
Very confident
Comment:
The government’s plans are short-termist at best and unsustainable, in the medium term, which means they will make UK households worse off, in the end, because of the additional distortions that they will create, it’s not a zero sum game but the pie is shrinking because of the newly introduced distortions. In addition, by undermining longer term efforts to address climate change, they make the younger generations seriously worse off. Any benefits to households will be short-lived.
Question 2: Which of the following policies is the most desirable to meet the ECBs objective to achieve its mandate of “price stability” as you understand this term.
Answer:
Inflation targeting
Confidence level:
Extremely confident
Comment:
For the reasons stated above an abandonment of inflation targeting by the ECB is likely to de anchor inflation expectations and could undermine the foundations of the monetary union - which we should not forget is a political project, a project for peace in Europe, and not an optimal currency union.
Question 1: To what extent do you agree with the following statement? “The European Central Bank should systematically allow for inflation to exceed its target to compensate for periods of below target inflation.”
Answer:
Strongly disagree
Confidence level:
Extremely confident
Comment:
This idea could undermine the very foundations of the monetary union, not least because it could lead to inflation expectations becoming de-anchored. If so, it could fuel further hostility against the ECB in Germany and a rise of the far right in future elections.
Whatever the economic merits of this idea, they are detached from political realities. Average inflation targeting is likely to be perceived as abandonment of price stability by the ECB. The ECB has already been under fierce political attack in Germany for its accommodative monetary policy. Although these attacks are not fully justified - QE was very much needed to reduce deflation risk and this was vindicated in the European court - it is still true that it has indirectly helped governments finance fiscal deficits and reduced their borrowing costs, notwithstanding the fact that this was not the purpose of the exercise (they also financed the private sector, which is what saved the ECB case in court).
Average inflation targeting, however defined, is too vague. Without specifying a target horizon it’s by definition vague, and is likely to de anchor inflation expectations in the short run. Even if a target horizon is specified, this is likely to be arbitrary and that can reduce central bank credibility, which, once again would de anchor inflation expectations.
In fact, this may already be happening in the US - although the jury is still out on that experiment. It would, therefore, be premature and politically irresponsible for the ECB to follow the Fed on this occasion without waiting for evidence that would support such a move. In my honest opinion, such evidence is unlikely to be forthcoming.
Very wise of the ECB Governing Council to steer clear of average inflation targeting at this juncture.
The CFM surveys informs the public about the views held by prominent economists based in Europe on important macroeconomic and public policy questions. Some surveys focus specifically on the UK economy (as the CFM is a UK research centre), but surveys can in principle focus on any macroeconomic question for any region. The surveys shed light on the extent to which there is agreement or disagreement among these experts. An important motivation for the survey is to give a more comprehensive overview of the beliefs held by economists and in particular to include the views of those economists whose opinions are not frequently heard in public debates.
Questions mainly focus on macroeconomic and public policy topics. Although there are some questions that focus specifically on the UK economy, the setup of the survey is much broader and considers questions related to other countries/regions and also considers questions not tied to a specific economy.
The surveys are done in collaboration with the Centre for Economic Policy Research (CEPR).
Assisting Households Facing Rising Energy Costs
Question 2: Which of the following is the best way to address the impact of rising energy costs on household finances?
Question 3: Should a windfall tax be used to (fully or partially) finance support to households?
Question 1: Overall, which of the following best characterises how the government’s proposed energy policies will leave the average UK household over the medium term:
ECB Monetary Policy and Catch-up Inflation
Question 2: Which of the following policies is the most desirable to meet the ECBs objective to achieve its mandate of “price stability” as you understand this term.
Question 1: To what extent do you agree with the following statement? “The European Central Bank should systematically allow for inflation to exceed its target to compensate for periods of below target inflation.”
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