Pietro Reichlin's picture
Affiliation: 
Università LUISS G. Carli
Credentials: 
Professor of Economics

Voting history

Fiscal Rules in the European Monetary Union

Question 2: Which of the following is the one reform you would choose to improve fiscal rules?

Answer:
More flexible, countercyclical, or expenditure-based rules
Confidence level:
Very confident
Comment:
I think that rules are important and may be effective. But, given the level of uncertainty about the relative importance of moral hazard (in the conduct of national fiscal policies), about the size of fiscal multipliers and potential output, I think that some degree of flexibility is desirable.

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

Answer:
Strongly agree
Confidence level:
Very confident
Comment:
My main point is that the 60% target for the debt-GDP ratio is totally out of reach for the forseeable future and probably unmotivated. The EU institutions should exert pressure to enhance countercyclical fiscal policies and debt stabilization in addition to giving a strong role to the ESM and the ECB in sovereign debt market. I don't think that debt mutualization is a realistic option without major advancements in EU level political integration.

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:
Agree
Confidence level:
Confident
Comment:
The problem with the dual mandate is that the ECB is the only central bank in the world that is not backed by a state and a political authority. This exceptional degree of independence of unelected officials requires strong constraints on their policies, but it should not prevent monetary policy to respond to EMU wide business cycles. Ideally, unemployment and growth targets should be left to national governments. However, there are many reasons why counter-cyclical fiscal policies are bound to be less effective in the EMU. Among these are the limited fiscal space of some countries (exacerbated by fear of speculative attacks on sovereign debts) and the non internalized EMU wide benefits of national expansionary policies. Hence, strict adherence to the single mandate is dangerous and not realistic. Progressing toward a political union where federal institutions attain more legitimacy may overcome the conflict between independence and dual mandate.

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:
Very confident
Comment:
See my answer to the previous question

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:
Very confident
Comment:
There is large consensus that structural problems (demographics, pace of innovation, excess savings) are behind a long term fall of real interest rates, so that the range of inflation rates compatible with the zero lower bound is shrinking. On top of that, higher inflation may be a good way to make the surge in government debts more sustainable.

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