a column by Thomas Hasenzagl, Filippo Pellegrino, Lucrezia Reichlin and Giovanni Ricco for VOX: CEPR’s Policy Portal
What is happening to inflation and output in the euro area? The ECB has apparently lost the ability to raise inflation and price expectations have been sliding since the last recession. Much of the policy debate has focused on the flattening of the Phillips curve.
Yet, as this column shows, estimations of the joint output-inflation process point to a decline of both output potential and trend inflation as the most relevant elements of the puzzle.
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Showing posts with label ECB. Show all posts
Showing posts with label ECB. Show all posts
Wednesday, 23 October 2019
Monday, 21 October 2019
Monetary policy should prevent deflation and avoid a bad equilibrium
a column by Olli Rehn for VOX: CEPR’s Policy Portal
It has been recently suggested by a group of seasoned central bankers that there has been no danger of a deflationary spiral in the euro area.
This column argues instead that the threat of a deflationary spiral was avoided by several reinforcements of the degree of monetary policy accommodation since 2015, and that a key lesson of monetary policy of the last ten years is that timely action is essential to avoid the sort of profoundly harmful equilibrium that might arise from prolonged low inflation and zero interest rates.
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It has been recently suggested by a group of seasoned central bankers that there has been no danger of a deflationary spiral in the euro area.
This column argues instead that the threat of a deflationary spiral was avoided by several reinforcements of the degree of monetary policy accommodation since 2015, and that a key lesson of monetary policy of the last ten years is that timely action is essential to avoid the sort of profoundly harmful equilibrium that might arise from prolonged low inflation and zero interest rates.
Continue reading
Tuesday, 16 July 2019
The gender promotion gap: Evidence from central banking
a column by Laura Hospido, Luc Laeven and Ana Lamo for VOX: CEPR’s Policy Portal
The underrepresentation of women in economics is perhaps nowhere as visible as in central banks.
This column uses anonymised personnel data to analyse the career progression of men and women at the ECB. A wage gap in favour of men emerges within a few years of hiring, with one important driver being the presence of children. Women were also less likely to be promoted to a higher salary band up until 2010, when the ECB issued a statement supporting diversity and took measures to support gender balance.
Following this change, the promotion gap disappears.
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The underrepresentation of women in economics is perhaps nowhere as visible as in central banks.
This column uses anonymised personnel data to analyse the career progression of men and women at the ECB. A wage gap in favour of men emerges within a few years of hiring, with one important driver being the presence of children. Women were also less likely to be promoted to a higher salary band up until 2010, when the ECB issued a statement supporting diversity and took measures to support gender balance.
Following this change, the promotion gap disappears.
Continue reading
Wednesday, 19 June 2019
What option prices tell us about the ECB's unconventional monetary policies
a column by Stan Olijslagers, Annelie Petersen, Nander de Vette,and Sweder Van Wijnbergen for VOX: CEPR’s Policy Portal
The decade since the Global Crisis has seen central banks employ a range of monetary policy tools.
This column draws two lessons from the unconventional monetary policy measures employed during the European sovereign debt crisis.
First, central banks should communicate clearly – and with sufficient detail – in times of heightened market stress to lower tail risk perceptions in financial markets.
Second, policies aimed at changing the relative supply within different asset classes have an impact on perceived crash risk, while measures aimed at easing financing costs of commercial banks do not.
Continue reading
The decade since the Global Crisis has seen central banks employ a range of monetary policy tools.
This column draws two lessons from the unconventional monetary policy measures employed during the European sovereign debt crisis.
First, central banks should communicate clearly – and with sufficient detail – in times of heightened market stress to lower tail risk perceptions in financial markets.
Second, policies aimed at changing the relative supply within different asset classes have an impact on perceived crash risk, while measures aimed at easing financing costs of commercial banks do not.
Continue reading
Monday, 21 January 2019
The ECB’s performance during the crisis
a column by Ashoka Mody and Milan Nedeljkovic for VOX: CEPR’s Policy Portal
The ECB’s actions in the wake of the Global Crisis have been described as hesitant, relative to other central banks.
Based on analysis of financial markets' response to the ECB's interventions during the euro crisis, this column argues that central bank interventions are effective if they clearly signal a commitment to reinvigorating the economy and if they address the source rather than the symptom of financial stress.
The ECB did not follow these principles, limiting its ability to improve financial market sentiment.
Continue reading
The ECB’s actions in the wake of the Global Crisis have been described as hesitant, relative to other central banks.
Based on analysis of financial markets' response to the ECB's interventions during the euro crisis, this column argues that central bank interventions are effective if they clearly signal a commitment to reinvigorating the economy and if they address the source rather than the symptom of financial stress.
The ECB did not follow these principles, limiting its ability to improve financial market sentiment.
Continue reading
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