Sweder van Wijnbergen's picture
Affiliation: 
Universiteit van Amsterdam
Credentials: 
Professor of Economics

Voting history

The Eurozone COVID-19 Crisis: EU Policy Options

Question 2: What is the best mechanism to pay for economic support provided by and to EU member states to combat the COVID-19 crisis?

Answer:
Joint borrowing by member states (e.g. Coronabonds)
Confidence level:
Extremely confident
Comment:
I am surprized the ESM is not mentioned. Already exists, so no instituional or legislateive initiative needed, has € 540 billion headroom and can eaily be expanded as needed. Was created after the Greek crisis but still exists for exactly this type of sudden Europe wide problems requiring Europe level intervention.

Question 1: What is the total size of funding that you would advocate at the EU level in support of its members to weather the COVID-19 crisis this year?

 

 

Answer:
5-10% of GDP
Confidence level:
Confident
Comment:
And more if needed to avoid a US style collapse in employment.

Global risks from rising debt and asset prices

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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?

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Answer:
Agree
Confidence level:
Confident
Comment:
Low interest rates have encouraged banks to leverage up which in turn is leading to more demand by banks for risky assets, so yes QE is both encouraging banks to leverage up and is feeding a stockmarket rally.

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Question 1: Does the world economy face heightened risks arising from an excess of public and private debt and/or inflated asset prices?

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Answer:
Agree
Confidence level:
Confident
Comment:
In particular German banks are loaded up with german debt to the extent of almost 3 times their capital value; these holdings will crash when interest rates rise. LT interest rates going back up to 4% would trigger a 30% price drop on German banks'average 7 year maturity debt holdings. This would wipe out all capital of the entire german banking system. Yes that is a systemic risk.

Happiness and well-being as objectives of macro policy

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Question 2: Do you agree that quantitative well-being analysis should play an important role in guiding policy makers in determining macroeconomic policies?

 
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Answer:
Disagree
Confidence level:
Confident
Comment:
We simply do not know enough about its determinants and its relation to policy instruments to guide policy makers

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