Tag: ECB

Why the current crisis will be costly, long lasting, difficult to bring under control. Interpreting a multi-nature, multi-country, multi-hits shock

20 03 28

Daniele Langiu   daniele.langiu@gmail.com

Fabio Sdogati   fabio.sdogati@mip.polimi.it

 

In this paper we submit an interpretation, or ‘a model’, of the current crisis. We hope to shed some light on the endogenous mechanisms that are making the crisis costly both in humanitarian and economic terms, probably longer-lasting than many still imagine, or hope, and difficult to control in the absence of extreme intervention, as compared to historical, peace-time standards, by fiscal and monetary authorities the world over. Our question is: what can be said about the post-shock path of the crisis, from shock to recovery?

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ECB and the European Labour Market: “Let’s go.” “We can’t.” “Why not?” “We’re waiting for Godot.” “Let’s Tighten.” “We Can’t.” Why Not?” “We’re Waiting for Wage and Price Increases”

Fabio Sdogati

2017 08 08

 

“But let me [Draghi] just make clear one thing: after a long time, we are finally experiencing a robust recovery, where we only have to wait for wages and prices to move towards our objective.”

The bottom line

By announcing that waiting is all that’s left to do in order to get wage and price inflation, the ECB shows that she has no clear idea as to how profound are changes that are affecting labor markets, nor about the effects that such changes have on the supposed effectivness of monetary policy. I submit that labor markets have been transforming in such a way that the chain of links growth-> wage inflation -> price inflation, has to a large extent broken down (Germany my be a partial exception). The implication is the same I, and many others, have been drawing for years: it is fiscal stimuli that generate growth-cum-wage-rises, not monetary stimuli. (Something, to be honest, Mr. Draghi points out, in politically correct terms, at every press conference.)

I have identified two parts in the introductory statement to the July 20 ECB president’s press conference: one, which few will object to my calling boring and repetitious: I will not discuss this part; and another, which I believe to be most interesting, and will therefore discuss in some detail.

Continue reading “ECB and the European Labour Market: “Let’s go.” “We can’t.” “Why not?” “We’re waiting for Godot.” “Let’s Tighten.” “We Can’t.” Why Not?” “We’re Waiting for Wage and Price Increases”” →

QE for Growth? Bullshit

A few years back a really small book attracted my attention because of its title. I know, that is the way it usually happens. But this one title was really special: On bullshit, by Harry G. Frankfurt, moral philosopher, Professor Emeritus of Philosophy at Princeton University (Princeton University press, 2003). Obviously, a must-buy, must-read, must try to understand. After all, it is not everyday that such an expression is used by a moral philosopher, let alone become the subject matter of a book. The opening lines of the book read as follows:

“One of the most salient features of our culture is that there is so much bullshit. Everyone knows this. Each of us contributes his share. But we tend to take the situation for granted. Most people are rather confident of their ability to recognize bullshit and to avoid being taken in by it.”

Fast forward. In a recent post Simon Wren-Lewis, a colleague at Oxford, mentioned Professor Frankfurt and his work on bullshit. Now, before reading Professor Frankfurt, Emeritus at Princeton, I would have never thought of using such language myself. If in addition, however, Wren-Lewis uses the concept, I feel like I am free to use it myself: after all, if my majors do…

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Against the European Central Bank (not against the Euro): ECB has chosen not to fight for a stronger Union

“The I.M.F is Telling Europe the Euro Doesn’t Work”. So the New York Times titles an article about a hitherto ‘secret’ imf ‘public debt sustainability analysis’ through which the fund, after just six years since the beginning of the so-called ‘Greek crisis’, realizes that the debt is (beg to differ: was made to be, by the fund itself, the ecb and the european commission) unsustainable. More on this document elsewhere and back to the title of the NYT. Continue reading “Against the European Central Bank (not against the Euro): ECB has chosen not to fight for a stronger Union” →

ECB about to Cut Its Rates. So, Why Isn’t the Euro Depreciating?

Over the last few days I have been arguing that the policy measure the ECB is expected to adopt on June 5 will have effects on real economic activity that will be neither sizeable nor lasting. Save, I added, on compensations and bonuses for CEOs, CFO,s, and CIO at banks, mutual funds, and financial intermediaries in general.

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