Patrick Minford's picture
Affiliation: 
Cardiff Business School
Credentials: 
Professor of economics

Voting history

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.

Answer:
NGDP targeting
Confidence level:
Confident
Comment:
My answer above deals with this. It is worth adding that the substantial power of NGDP targeting to stabilise comes from the long ahead commitment it implies for future interest rates under rational expectations.

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:
Agree
Confidence level:
Confident
Comment:
I think that the best policy is nominal GDP targeting because this creates a powerful stabilising influence from monetary policy. I found this gave the highest welfare under conditions of fixed price stickiness, based on simulations on US data- see my 2016 paper at 10.1016/j.intfin.2016.04.011. Similarly, when backed by a fiscal backstop preventing the zero lower bound, I found the policy was optimal for the US under more general conditions of state-dependent pricing that best modelled full US post-war experience- see my 2019 paper athttps://authors.elsevier.com/a/1dn3wxUDJvki7. Average 'catch-up' inflation targeting, together with an output gap response in practice gets close to Nominal GDP targeting. So I think moving towards this will be beneficial.

Monetary Policy and Inequality

Question 1: How large is the impact of monetary policy on the joint distribution of income and wealth?

Answer:
Small
Confidence level:
Very confident
Comment:
The role of monetary policy is to stabilise the economy- inflation and output- and set prices in the long run. Hence its effect on the economy is short run. Inequality is the result of long run tendencies in the economy so monetary policy will not affect it except temporarily- being temporary, its effect is small.

Question 2: What role should inequality play in the monetary policy decisions (interest rate policy and quantitative easing)?

Answer:
No role
Confidence level:
Extremely confident
Comment:
See first answer. Monetary policy should focus on its role as a stabiliser and long run setter of the price level. It has no other role. Redistribution to reduce inequality is the role of the government through tax/benefit policy.

Fiscal Rules in the European Monetary Union

Proposition 1: The existing fiscal rules for European Monetary Union members require revision.

Answer:
Strongly agree
Confidence level:
Extremely confident
Comment:
Given the asymmetric shocks hitting the eurozone regions/countries, a unitary monetary policy cannot be an effective stabiliser. But national fiscal policy under normal budget constraints can. Simulations we have done in Cardiff on a New Keynesian DSGE model of the eurozone suggest these policies, absent the SGP, can be highly effective

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