Tuesday, April 25th, 2017 4:05 pm

ECB Asset Purchases

Question A: The ECB's asset purchases over the past two years have reduced the threat of deflation in the euro area as a whole.

Responses
 

Source: European IGM Economic Experts Panel
www.igmchicago.org/european-economic-experts-panel

Responses weighted by each expert's confidence

Source: European IGM Economic Experts Panel
www.igmchicago.org/european-economic-experts-panel

Question 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.

Responses
 

Source: European IGM Economic Experts Panel
www.igmchicago.org/european-economic-experts-panel

Responses weighted by each expert's confidence

Source: European IGM Economic Experts Panel
www.igmchicago.org/european-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Aghion Philippe Aghion Harvard Did Not Answer
Bio/Vote History
         
Allen Franklin Allen Imperial College London Uncertain 6
It's difficult to know the effect of these asset purchases on consumer price inflation.
Bio/Vote History
         
Antras Pol Antras Harvard No Opinion
Bio/Vote History
         
Baldwin Richard Baldwin The Graduate Institute Geneva Did Not Answer
Bio/Vote History
         
Besley Timothy J. Besley LSE Did Not Answer
Bio/Vote History
         
Blanchard Olivier Blanchard Peterson Institute Strongly Agree 9
Hard to see how monetary expansion, in whatever form, would do nothing for activity or inflation. Cannot think of strong perverse effects
Bio/Vote History
         
Bloom Nicholas Bloom Stanford Uncertain 1
Bio/Vote History
         
Blundell Richard William Blundell University College London Did Not Answer
Bio/Vote History
         
Bénassy-Quéré Agnès Bénassy-Quéré Paris School of Economics Agree 6
Bio/Vote History
         
Carletti Elena Carletti Bocconi Strongly Agree 9
Bio/Vote History
         
Danthine Jean-Pierre Danthine Paris School of Economics Uncertain 1
I am skeptical that there was a real threat of deflation
Bio/Vote History
         
De Grauwe Paul De Grauwe LSE Strongly Agree 8
Bio/Vote History
         
Eeckhout Jan Eeckhout University College London Uncertain 6
Bio/Vote History
         
Fehr Ernst Fehr Universität Zurich Did Not Answer
Bio/Vote History
         
Freixas Xavier Freixas Universitat Pompeu Fabra Strongly Agree 9
Bio/Vote History
         
Fuchs-Schündeln Nicola Fuchs-Schündeln Goethe-Universität Frankfurt Agree 6
Bio/Vote History
         
Galí Jordi Galí Universitat Pompeu Fabra Agree 8
The evidence (e.g. Andrade et al. (2016)) points to reductions in risk premia as well as in expected future policy rates at announcement.
-see background information here
Bio/Vote History
         
Garicano Luis Garicano LSE Did Not Answer
Bio/Vote History
         
Giavazzi Francesco Giavazzi Bocconi Strongly Agree 7
Hard to distinguish between role of purchases and of negative rates (via the exchange rate channel). Both probably helped
Bio/Vote History
         
Griffith Rachel Griffith University of Manchester Uncertain 1
Bio/Vote History
         
Guerrieri Veronica Guerrieri Chicago Booth Agree 8
Bio/Vote History
         
Guiso Luigi Guiso Einaudi Institute for Economics and Finance Strongly Agree 8
Bio/Vote History
         
Hellwig Martin Hellwig Max Planck Institute for Research on Collective Goods Agree 4
The associated compression of bank profitability had a significant countervailing effect.
Bio/Vote History
         
Honohan Patrick Honohan Trinity College Dublin Strongly Agree 10
100 years of monetary theory cannot all be wrong.
Bio/Vote History
         
Kleven Henrik Kleven Princeton Did Not Answer
Bio/Vote History
         
Krahnen Jan Pieter Krahnen Goethe University Frankfurt Uncertain 6
APP has desired real effects iff credit supply is the problem, not demand, nor structural reform. Moreover, is mild deflation a threat?
Bio/Vote History
         
Krusell Per Krusell Stockholm University Agree 5
Bio/Vote History
         
Kőszegi Botond Kőszegi Central European University Did Not Answer
Bio/Vote History
         
La Ferrara Eliana La Ferrara Bocconi No Opinion
Bio/Vote History
         
Leuz Christian Leuz Chicago Booth Agree 3
QE likely helped w/ deflationary pressures but by how much is unclear. There are also negative effects that question sets aside.
Bio/Vote History
         
Meghir Costas Meghir Yale Did Not Answer
Bio/Vote History
         
Neary Peter Neary Oxford Agree 5
Reduced but not eliminated. Monetary policy alone cannot get the EU out of deflation, only a rise in external demand or a fiscal stimulus.
Bio/Vote History
         
O'Rourke Kevin O'Rourke Oxford Did Not Answer
Bio/Vote History
         
Pagano Marco Pagano Università di Napoli Federico II Strongly Agree 8
Bio/Vote History
         
Pastor Lubos Pastor Chicago Booth Agree 8
Bio/Vote History
         
Persson Torsten Persson Stockholm University Agree 3
Bio/Vote History
         
Pissarides Christopher Pissarides LSE Strongly Agree 1
one of the few things we know with some confidence in macro is that increasing the supply of money reduces the risk of deflation
Bio/Vote History
         
Portes Richard Portes London Business School Strongly Agree 9
Inflation expectations in Eurozone became 'de-anchored' by summer 2014. ECB action, though too long delayed, was essential to stop deflation
Bio/Vote History
         
Prendergast Canice Prendergast Chicago Booth Agree 8
Bio/Vote History
         
Reichlin Lucrezia Reichlin London Business School Strongly Agree 10
Bio/Vote History
         
Repullo Rafael Repullo CEMFI Strongly Disagree 7
Panelist meant to vote Strongly Agree
Bio/Vote History
         
Rey Hélène Rey London Business School Strongly Agree 8
They ensured that no self -fulling vicious risk premium dynamics happen in periphery and appropriate loose monetary conditions remain.
Bio/Vote History
         
Schoar Antoinette Schoar MIT Agree 7
Bio/Vote History
         
Van Reenen John Van Reenen MIT Agree 7
Bio/Vote History
         
Vickers John Vickers Oxford Agree 5
Bio/Vote History
         
Voth Hans-Joachim Voth University of Zurich Agree 7
Bio/Vote History
         
Weder di Mauro Beatrice Weder di Mauro Gutenberg University Mainz and INSEAD Agree 8
Bio/Vote History
         
Whelan Karl Whelan University College Dublin Agree 6
QE is complex but most careful research shows it impacts long-term rates. ECB program has definitely reduced sovereign borrowing rates.
Bio/Vote History
         
Wyplosz Charles Wyplosz The Graduate Institute Geneva Agree 6
This is what comes from empirical studies, but SD are often large.
Bio/Vote History
         
Zilibotti Fabrizio Zilibotti Universität Zurich Strongly Agree 9
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Aghion Philippe Aghion Harvard Did Not Answer
Bio/Vote History
         
Allen Franklin Allen Imperial College London Disagree 5
It seems quite uncertain to me what the effect on growth of the asset purchases. It will depend among other things on how they are unwound
Bio/Vote History
         
Antras Pol Antras Harvard No Opinion
Bio/Vote History
         
Baldwin Richard Baldwin The Graduate Institute Geneva Did Not Answer
Bio/Vote History
         
Besley Timothy J. Besley LSE Did Not Answer
Bio/Vote History
         
Blanchard Olivier Blanchard Peterson Institute Strongly Agree 9
one may disagree with ``strongly''. but it would work in the right direction.
Bio/Vote History
         
Bloom Nicholas Bloom Stanford Uncertain 1
Bio/Vote History
         
Blundell Richard William Blundell University College London Did Not Answer
Bio/Vote History
         
Bénassy-Quéré Agnès Bénassy-Quéré Paris School of Economics Agree 5
The key issue is to maintain nominal interest rates below nominal growth during a certain period.
Bio/Vote History
         
Carletti Elena Carletti Bocconi Uncertain 9
the ECB program is not targeted directly to stimulate growth. It may help the economy recovering but it is not its main goal
Bio/Vote History
         
Danthine Jean-Pierre Danthine Paris School of Economics Disagree 5
I am not convinced that simply more of the same (QE) would have a significant impact at this stage.
Bio/Vote History
         
De Grauwe Paul De Grauwe LSE Agree 6
Bio/Vote History
         
Eeckhout Jan Eeckhout University College London Uncertain 6
Bio/Vote History
         
Fehr Ernst Fehr Universität Zurich Did Not Answer
Bio/Vote History
         
Freixas Xavier Freixas Universitat Pompeu Fabra Disagree 7
Economic activity can be helped by this type of measure in the short run, but not in the long run
Bio/Vote History
         
Fuchs-Schündeln Nicola Fuchs-Schündeln Goethe-Universität Frankfurt Uncertain 9
Bio/Vote History
         
Galí Jordi Galí Universitat Pompeu Fabra Uncertain 7
It could help marginally by exploiting the same channels, though possibly with decreasing returns. But alternatives exist: fiscal policy.
-see background information here
Bio/Vote History
         
Garicano Luis Garicano LSE Did Not Answer
Bio/Vote History
         
Giavazzi Francesco Giavazzi Bocconi Uncertain 7
purchases have achieved what they were supposed to. Unlikely they can do more--though in the case described they should not be removed
Bio/Vote History
         
Griffith Rachel Griffith University of Manchester Uncertain 1
Bio/Vote History
         
Guerrieri Veronica Guerrieri Chicago Booth Uncertain 8
Bio/Vote History
         
Guiso Luigi Guiso Einaudi Institute for Economics and Finance Strongly Disagree 9

Bio/Vote History
         
Hellwig Martin Hellwig Max Planck Institute for Research on Collective Goods Uncertain 4
If slow growth is due to high leverage of nonfinancial and financial firms, substantial new growth requires that to be dealt with first.
Bio/Vote History
         
Honohan Patrick Honohan Trinity College Dublin Agree 8
Benefit mainly in the stressed countries; effectiveness of this policy nearing its limit.
Bio/Vote History
         
Kleven Henrik Kleven Princeton Did Not Answer
Bio/Vote History
         
Krahnen Jan Pieter Krahnen Goethe University Frankfurt Strongly Disagree 6
APP may have opposite effect: Expectations of unsustainable debt levels at states and banks leading to low interest rates & low growth.
Bio/Vote History
         
Krusell Per Krusell Stockholm University Uncertain 5
Bio/Vote History
         
Kőszegi Botond Kőszegi Central European University Did Not Answer
Bio/Vote History
         
La Ferrara Eliana La Ferrara Bocconi No Opinion
Bio/Vote History
         
Leuz Christian Leuz Chicago Booth Uncertain 2
Perhaps one could make a case for an extension of the program (in case of a shock) but I am skeptical about further expansion.
Bio/Vote History
         
Meghir Costas Meghir Yale Did Not Answer
Bio/Vote History
         
Neary Peter Neary Oxford Uncertain 5
"Substantial" Is a big ask, and growth will ultimately be affected more by structural issues and demand-side shocks
Bio/Vote History
         
O'Rourke Kevin O'Rourke Oxford Did Not Answer
Bio/Vote History
         
Pagano Marco Pagano Università di Napoli Federico II Uncertain 8
Bio/Vote History
         
Pastor Lubos Pastor Chicago Booth Uncertain 8
Hard to tell. In any event, ECB aims to manage inflation rather than boost growth.
Bio/Vote History
         
Persson Torsten Persson Stockholm University Uncertain 3
Bio/Vote History
         
Pissarides Christopher Pissarides LSE Uncertain 3
It will bring confidence that deflation will not return but whether this is enough to "substantially" increase growth is uncertain
Bio/Vote History
         
Portes Richard Portes London Business School Strongly Disagree 9
Major constraints on expanding asset purchase program and diminishing marginal returns.
Bio/Vote History
         
Prendergast Canice Prendergast Chicago Booth Agree 8
Bio/Vote History
         
Reichlin Lucrezia Reichlin London Business School Uncertain 10
Not clear what the question means: inflation, real growth, financial stability? if it means weaker growth and inflation then strongly agree
Bio/Vote History
         
Repullo Rafael Repullo CEMFI Strongly Disagree 7
Bio/Vote History
         
Rey Hélène Rey London Business School Agree 8
If spreads diverge (self-fulfilling debt crisis) in peri[hery, restoring monetary policy tramsmission will be key.
Bio/Vote History
         
Schoar Antoinette Schoar MIT Disagree 8
Bio/Vote History
         
Van Reenen John Van Reenen MIT Agree 4
Bio/Vote History
         
Vickers John Vickers Oxford Uncertain 5
Diminishing returns to such a policy
Bio/Vote History
         
Voth Hans-Joachim Voth University of Zurich Agree 6
Bio/Vote History
         
Weder di Mauro Beatrice Weder di Mauro Gutenberg University Mainz and INSEAD Uncertain 5
Bio/Vote History
         
Whelan Karl Whelan University College Dublin Disagree 6
The disagreement is because of the word "substantial". Not sure that any realistic policy can "substantially" improve European growth rates.
Bio/Vote History
         
Wyplosz Charles Wyplosz The Graduate Institute Geneva Uncertain 3
Available assets are getting scarce.
Bio/Vote History
         
Zilibotti Fabrizio Zilibotti Universität Zurich Uncertain 5
Bio/Vote History
         

About the European IGM Economic Experts Panel

This panel explores the views of European economists on vital public policy issues. It does this by polling them on important policy questions, by including a way for them to explain their answers briefly if they wish, and by disseminating these responses directly to the public in a simple format.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the main areas of economics, to be geographically diverse, and to include older and younger scholars. As with the IGM’s US panel, the experts are all outstanding researchers in their fields. The panel includes recipients of top national and international prizes in economics, fellows of the Econometric society and the European Economic Association, members of distinguished national and international policymaking bodies in Europe, recipients of significant grants for economic research, highly accomplished affiliates and program directors of the Centre for Economic Policy Research and the National Bureau of Economic Research, and past and current editors of leading academic journals in the profession. This approach not only provides a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters in Europe and beyond.

Questions for the European IGM Economic Experts Panel are emailed individually to all members of the panel. They are phrased as statements with which one can agree or disagree. The experts are also asked how confident they are in their knowledge of the issue associated with the question (10 being highest). Each panelist responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering. They may also include brief comments with their responses, or provide links to relevant sources.

It is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist knows a lot about a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's knowledge that he or she does not feel well placed to judge. In this case, our panelists vote "no opinion".

Panelists suggest many of the questions themselves. Members of the public are also welcome to suggest questions (see link below). Although IGM faculty members are responsible for deciding the final version of each question, we send a draft of the question to the panel in advance and invite them to point out problems with the wording if they see any. This process helps us to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and will be analyzed for an article to appear in a peer-reviewed journal.

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