Monetary policy

Monetary window-dressing

The best way for a central bank to achieve both low inflation and low unemployment is to make it pursue price stability alone. [...]

Monetary policy needs public scrutiny

Central banks have a crucial role to fulfil in our economies. This role thus deserves public scrutiny and debate. Given the RBNZ’s independence, external commentary on its actions is the most effective check on its operations. [...]

Monetary policy isn’t a panacea

In the wake of the financial crisis power shifted from politicians to the ECB, now it’s time for elected governments to address the underlying causes of Europe’s malaise. [...]

An ECB dead end

If you are a born optimist, you may have concluded by now that the euro crisis is over. Indeed, we have not heard much about it lately. No bailouts, no bank runs, no Greek elections. It almost feels like financial stability. If you are a realist, however, you would be looking at two figures and know that we are right in the middle of the euro crisis. [...]

Germany’s bubble economy is on borrowed time

The real problems for Germany will begin once the ECB follows the Fed’s example and tapers its monetary stimulus. But thanks to the eurozone periphery, it may take years until the ECB feels ready to take this step. In the meantime, Germany may enjoy its bubble economy while it lasts. [...]

Who’s afraid of eurozone deflation?

By demonising ‘deflation’ (even if it is really just price stability by another name), the ECB underlines its commitment to helping the eurozone’s debtors, whether they are financial institutions or governments. The response to this so-called deflation threat will be to maintain interest rates negative or even embark on a program of quantitative easing, which may be announced over the coming days. In effect, however, such policies are just bailout programs by stealth. [...]