Volker Wieland's picture
Affiliation: 
Goethe University Frankfurt and IMFS
Credentials: 
Professor of Monetary Economics
Member of German Council of Economic Experts
Managing Director, Institute for Monetary and Financial Stability

Voting history

Juncker's State of the Union Address

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Question 1; Do you agree that euro membership should be compulsory for all EU member states?

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Answer:
Neither agree nor disagree
Confidence level:
Extremely confident
Comment:
My understanding is that it is a fact already that all EU member states except Denmark and Great Britain are required to adopt the euro once they fulfil the conditions. This is also what Juncker repeated in his speech. I am somewhat surprised that he received so much attention with this statement. I agree that it is a fact at this point. I would not recommend starting an initiative to change the current rules. I would disagree with now requiring those EU members that received an opt-out to adopt the euro. I think great care should be given to the economic conditions. Clearly, there've been mistakes in the past, and countries admitted based on faulty data or insufficiently sustainable conditions. So , I agree with Juncker's statement to the extent it reflects the facts and disagree with wider interpretations suggesting that countries should adopt the euro without clearly fulfilling the conditions. Finally, whether it was a good idea in the first place is another question.

Wages and economic recoveries

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Question 2: Do you agree that the different behaviour of UK real wages relative to Eurozone wages during the Great Recession is in large part due to the UK having different labour market policies?

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Answer:
Agree
Confidence level:
Very confident

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Question 1: Do you agree that lower real wage growth was beneficial for employment levels during the Great Recession?

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Answer:
Agree
Confidence level:
Very confident

The Future of Central Bank Independence

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Question 2: Do you agree that the traditional argument that less central bank independence leads to higher inflation will (still) be relevant over the next 48 months in Western economies?

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Answer:
Strongly agree
Confidence level:
Very confident
Comment:
Yes, the ECB and other central banks will find many supporters among hard-pressed governments for argueing that low rates are still needed and overshooting inflation objectives ought to be tolerated after staying below for so long. Throw in a tumbling banking system and high share of non-performing loans, and you find even more reasons for keeping rates low and postponing any financial reckoning.

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Question 1: Do you agree that central bank independence in the Eurozone and the UK will decline over the next 48 months?

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Answer:
Neither agree nor disagree
Confidence level:
Very confident
Comment:
I don't think the question is well posed with regard to the timing. In the formal sense, the ECB is more independent than any other central bank as no single government or national electorate can change the treaty that defines its independence. Unanimous decision to change the treaty in the next 48 months is very unlikely. De facto, much independence has been lost by annnouncing or undertaking SMP, OMT and PSPP purchases of sovereign debt (in a monetary union with otherwise sovereign members.) Governments will continue to expect the ECB to help them out with regard to interest costs. Hence, the ECB will loose many of its current fans once the time comes that it has to stop buying or even start selling government debt to meet its (harmonized consumer price) inflation objective. Lacking the kind of popular support in national electorates that the Bundesbank enjoyed, civil servants in charge of central banking will find it rather difficult to stand up to elected heads of government and finance ministers.

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