SecondThis is an exciting debate, European Central Bank He himself participated in it: “Fiscal dominance”, the national budget policy’s domination of the central bank, is called an economist’s nightmare. If this happens, the central bank can no longer arbitrarily ask what monetary policy is needed to ensure price stability—it must take inappropriate consideration of the needs of highly indebted countries. Is Europe on its way?Member of the European Central Bank Executive Committee Isabel Schnabel Recently, I strongly oppose this and mentioned an empirical survey. According to the survey, there is no “feedback effect” between the development of national debt and monetary policy decisions. It is true that in the new crown crisis, national debt has increased substantially-but the European Central Bank does not support this.
The institute now responds to this call An empirical study was conducted in Mannheim. In a research funded by the Brigitte Strube Foundation, FAZ received this research in advance. Scientists Friedrich Heinemann and Jan Kemper dealt with a possibility of fiscal dominance, so to speak, Individual components: the question of whether there is a possible correlation between the voting behavior of members of the management committee on monetary policy decisions and the relationship between their sovereign debt status.
Scientists restrictively say that if this is indeed the case, then of course it is not necessary to prove causality. If there are, two mechanisms can be imagined: Central bankers will not only consider Europe, but will also be affected by domestic debates. Or, compared with countries with less debt, countries with more debt prefer representatives of different types or different beliefs and schools of thought when choosing a central bank governor.
ZEW analysis of statements made by members of the European Central Bank Board of Governors
Specifically, ZEW evaluated the “Dow Jones Factiva” database. Since the voting results of the management committee are not public, the researchers analyzed all monetary policy statements made by members of the European Central Bank Council in the media as approximate values. They do this because they know that members of the ECB Council can of course also make public statements that are different from what they voted on the Council afterwards, for example to please the public in their country. But it is more likely that the remarks made by members of the Council in the media mostly reflect their post-event positions on the Council.
Saturday at 9 a.m.
All statements made by board members on the European Central Bank’s crisis plan PEPP from mid-March to mid-June 2021 are taken into account. After these remarks, the board members were divided into three groups: “hawks” who tend to tighten monetary policy, and “pigeons” who tend to tighten monetary policy prefer looser monetary policies and “quite neutral” people.
