This week’s IGM Economic Experts Panel statements:
A) Under current policies on climate change, the associated physical risks (such as those arising from total seasonal rainfall and sea level changes, and increased frequency, severity, and correlation of extreme weather events) will be at most a very small factor in monetary policy decisions over the next decade.
B) The physical risks associated with climate change under current policies are likely to threaten financial stability over the next decade.
Keyword: monetary policy
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With the Eurozone economy weakening, many commentators are calling on the European Central Bank (ECB) to provide fresh stimulus. But what if the diverse monetary policy tools used by the ECB since the financial crisis have reached the limits of their effectiveness in promoting recovery? Could European governments contribute to stimulating the economy by increasing public spending or reducing taxes? And should fiscal policy now be focused more on raising demand by ‘loosening the public purse strings’ than on reducing public debt?
Recent nominations to join the board of governors of the Federal Reserve have raised concerns about political threats to the independence of monetary policy-making. The Economist has explained the dangers of weakened central banks, not only in the United States but also elsewhere in the world. And economists and economic journalists have questioned the economic ideas of President Trump’s latest Fed picks, both of whom have now withdrawn their names.
This week's IGM European Economic Experts Panel Statement:
Britain’s Labour party recently proposed giving the Bank of England a target of 3% annual labor productivity growth. Consider the following statement:
Central banks cannot significantly increase productivity growth over a ten year horizon, except perhaps by promoting macroeconomic stability.
This week's IGM Economic Experts Panel statement:
Britain’s Labour party recently proposed giving the Bank of England a target of 3% annual labor productivity growth. Consider the following statement:
Central banks cannot significantly increase productivity growth over a ten year horizon, except perhaps by promoting macroeconomic stability.
This week's IGM Economic Experts Panel statements:
A) If the Fed changed its inflation target from 2% to 4%, the long-run costs of inflation for households would be essentially unchanged.
B) Raising the inflation target to 4% would make it possible for the Fed to lower rates by a greater amount in a future recession.
This week’s European Economic Experts Panel statements:
A) The ECB's asset purchases over the past two years have reduced the threat of deflation in the euro area as a whole.
B) If the economic outlook in the euro area becomes less favorable, then increasing the ECB's asset purchase program (in size or duration) would substantially increase the euro area's economic growth over the following five years.
This week's IGM Economic Experts Panel statement:
The ratio of the 90th to the 10th percentile of the US income distribution has been unaffected by the Federal Reserve’s unconventional monetary policies since the financial crisis.
This week's IGM Economic Experts Panel statements:
A) The Fed should raise its target interest rate when it meets in mid-December.
B) The Fed should have raised interest rates sooner, rather than leaving them near zero for this long.
This week’s IGM Economic Experts Panel statement:
Legislation introduced in Congress would require the Federal Reserve to "submit to the appropriate congressional committees…a Directive Policy Rule", which shall "describe the strategy or rule of the Federal Open Market Committee for the systematic quantitative adjustment of the Policy Instrument Target to respond to a change in the Intermediate Policy Inputs." Should the Fed deviate from the rule, the Fed Chair would have to "testify before the appropriate congressional committees as to why the [rule]…is not in compliance." Enacting this provision would improve monetary policy outcomes in the U.S.
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