Ricardo Reis's picture
Affiliation: 
London School of Economics
Credentials: 
AW Phillips Professor of Economics

Voting history

Asset Prices and Monetary Policy

Proposition 2: Asset prices and financial imbalances are best addressed using macroprudential tools and left out of the monetary policy decision making process.

 

Answer:
Disagree
Confidence level:
Very confident
Comment:
They should not be left our to the monetary policy decision process, even if macrprudential tools are the first line of defense.

Proposition 1: The Bank of England’s mandate should be officially modified to take housing or other asset prices into account in its monetary policy decisions.

Answer:
Disagree
Confidence level:
Very confident
Comment:
The Bank can (or not) respond to asset prices more (or less) than it does right now, without needing to change the remit, as recently re-stated: https://www.bankofengland.co.uk/-/media/boe/files/letter/2021/march/2021-mpc-remit-letter.pdf If a change were to occur, it might be better stated in terms of an alternative price index to the CPI (for instance, a dynamic version that takes into account intertemporal substitution would put a larger weight on asset prices: https://personal.lse.ac.uk/reisr/papers/99-dpi.pdf )

The ECB’s Green Agenda

Question 2: Would you support changing the ECB’s mandate to incorporate the EU’s target of carbon neutrality by 2050, if such a change is deemed legally necessary to adopt your preferred approach?

Answer:
Other or no opinion
Confidence level:
Not confident
Comment:
It is not legally necessary to adopt my approach to question 1, so the "if" is not satisfied. More generally, I think incorporating carbon targets for central banks may eventually be a good idea. But I'm not sure how I would do it right now in an effective way, given what I know of research in the area. There are some good ways of changing the ECB's mandate to incorporate this that I would support, and many bad ones that I would not support.

 Question 1: Which of the following actions is the most advisable approach for European Central Bank to address the environmental impact of its bond-purchasing policies?

Answer:
Aiming for market neutrality
Confidence level:
Confident
Comment:
This may change with its mandate review but, right now, given the goals of the bond-purchasing programs and the targets of the ECB, market neutrality seems to be the right answer. But, and this is important, defining and measuring market neutrality is not straightforward. The Papoutsi et al research mentioned in the question argues that current measures of market neutrality are flawed, and biased against green investments. I think there are further reasons why this is so, including an over-reliance on credit rating agencies. So, aim for market neutrality, but measure better what this is, and doing so may well lead to buying more green bonds than in the current portfolio.

Should We Worry About Post-Covid Inflation?

Question 2: Which of the following will be the greatest inflationary (or deflationary) force facing the UK economy?

Answer:
Past monetary policy decisions and other monetary factors
Confidence level:
Very confident
Comment:
I wanted to pick two: public debt and monetary factors, as they are tightly linked.

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