tag:blogger.com,1999:blog-2546602206734889307.post3730742726809135547..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: What the ECB needs to doMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2546602206734889307.post-63648241277553836572012-05-07T19:47:13.072+00:002012-05-07T19:47:13.072+00:00Nice academical exercise. But, I have some questio...Nice academical exercise. But, I have some questions on my mind. <br /><br />Isn't euro a form of world money? And by that I mean, isn't euro an international reserve currency? It is clear to me that this is the reason for austerity in peripheral economies. How would this policy effect the ability to compete against dollar?<br /><br />Also, competitiveness in the internal market depends on productivity growth and labour costs in each country. By looking at the evolution of nominal labour costs (AMECO) it's clear that the core gained competitive advantages against the periphery. Should fiscal policy influence this part of productivity? And how?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-28124722049595577432012-05-07T12:08:28.885+00:002012-05-07T12:08:28.885+00:00Bravo indeed. I think you slightly understate you...Bravo indeed. I think you slightly understate your case. Yes we generally assume central banks affect only inflation, but we generally assume nonsense for simplicity. For example we generally assume one price level per currency, so we generally assume that there can not be a competitiveness problem within the Euro block (or UK or US and this is always false). <br /><br />I guess that central banks affect inflation via interest rates -> investment - a Phillips curve of some sort > inflation.<br />The only affect average inflation follows from strong assumptions certainly including the assumption that the Phillips curve of some sort is linear. It isn't in any data. I just don't see how looser monetary policy is supposed to cause Spanish inflation to accelerate. If it is very hard to get negative inflation, as you correctly write, then uniform monetary policy with uniform risk premia will have different effects on countries that are vs are not stuck on the downward extreme nominal rigitity bound.<br /><br />Also what happened to Kantoos? Is it the Zeitgeist or something in the German water system ?Roberthttps://www.blogger.com/profile/14455788499385673507noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-40224520552935312892012-05-07T10:51:47.186+00:002012-05-07T10:51:47.186+00:00Bravo! I hope Hollande's people read this.Bravo! I hope Hollande's people read this.Anonymoushttps://www.blogger.com/profile/17640392547149192352noreply@blogger.com