Maria Demertzis - Academia.edu (original) (raw)

Papers by Maria Demertzis

RePEc: Research Papers in Economics, Aug 1, 1999

The literature argues that the benefits of an independent central bank accrue at no cost to the r... more The literature argues that the benefits of an independent central bank accrue at no cost to the real side. In this paper, we argue that the lack of correlation between monetary autonomy and output variability is due to the proactive role of fiscal policy when faced with rigid monetary objectives. Few of the attempts to measure these correlations actually allow for a changing fiscal role. Yet, when an independent authority handles monetary policy, fiscal and wage/social protection policies remain instruments in the hands of elected governments. We find that, so long as the two authorities pursue their goals independently of each other, a conflict arises that becomes stronger as preferences diverge. We also find that the establishment of a conservative central bank encourages more divergent preferences among the public (as reflected in the government that is elected). The election of more interventionist governments then makes it harder for either authority to reach its own preferred objectives, unless cooperation is possible.

Intereconomics

The new EU member candidates, as well as those who have had this status for a decade, present the... more The new EU member candidates, as well as those who have had this status for a decade, present the Union with an opportunity to decide what kind of club it should be.

Economia Politica, 2015

We present three different views of imperfect transparency in monetary policy: political transpar... more We present three different views of imperfect transparency in monetary policy: political transparency, economic transparency and constructive ambiguity. The first two show that transparency reduces the variability of inflation and the output gap but does not affect their average levels. But if the Central Bank is unable to commit to one particular set of preferences for all circumstances, then in line with the hypothesis of constructive ambiguity we find that both the levels and the variability of output and inflation will be affected-which means that this form of imperfect transparency could be used strategically. An empirical examination of these results, based on an index constructed by Eijffinger and Geraats, shows that macroeconomic averages are not much affected by transparency. But transparency appears to reduce the variability of inflation while increasing the variability of output. That suggests that Central Banks may in fact exploit constructive ambiguity when they try to be transparent. Keywords Ambiguity Á Imperfect transparency Á Independent monetary policies JEL Classification E52 Á E58 Views expressed are our own and do not necessarily reflect those of the institutions we are affiliated with.

The Routledge Handbook of FinTech, 2021

Policy briefs, 2019

Monetary policy must reinvent itself in the wake of the crisis. Reinvention is particularly impor... more Monetary policy must reinvent itself in the wake of the crisis. Reinvention is particularly important because the system is riddled with uncertainties and the scope for applying both conventional and unconventional instruments is limited. The architecture of Economic and Monetary Union makes the challenge even greater because alignment of preferences and policies can only go so far. The European Central Bank will have to be clearer on what it can do, while remaining flexible in order to manage current uncertainties and unknowns. While the ECB’s main objective is price stability, it will also have to contribute to the identification of, and response to, financial imbalances, while preserving its independence.

This Policy Contribution tries to answer two main questions: can cryptocurrencies acquire the rol... more This Policy Contribution tries to answer two main questions: can cryptocurrencies acquire the role of money? And what are the implications for central banks and monetary policy?

This Policy Contribution was written for the Informal ECOFIN Meeting, Bucharest, 5 April 2019. Th... more This Policy Contribution was written for the Informal ECOFIN Meeting, Bucharest, 5 April 2019. The authors would like to thank Grégory Claeys, Simone Tagliapietra, Georg Zachmann and Jeromin Zettelmeyer for suggestions and ideas. We also benefited from numerous discussions with senior officials across Europe, whom we would like to thank. Jan Mazza provided excellent research assistance. Executive summary

The recent crisis has revealed the unsustainability of large debt-financed negative external posi... more The recent crisis has revealed the unsustainability of large debt-financed negative external positions. Foreign direct investment is a more stable financing option for the current account because in general it is not debt-generating and has positive effects on the productivity of the recipient economy. After reviewing the determinants and mechanisms driving total FDI, this focus section goes on to look at the composition of FDI. Tradable sector FDI has the potential to improve the trade balance by stimulating exports. Policies that can attract FDI in tradable sectors are therefore highly desirable. The empirical analysis identifies wages and education as the two main determinants of this type of FDI in the euro area. The quality of business-relevant infrastructure and distance from important industrial centres are also components that boost the proportion of FDI in the tradable sector.

The aim of this report is to analyse capital movements in the European Union in a global context.... more The aim of this report is to analyse capital movements in the European Union in a global context. The monitoring and analysis of capital movements is essential for policymakers, given that capital flows can have welfare implications. Free movement of capital can enhance welfare if it channels savings towards productive use, but in crisis times, reliance on capital flows can also be a source of vulnerability if those flows transmit shocks across borders and disrupt local financial systems, with far-reaching spillovers into the real economy. The first two sections are devoted to the monitoring of developments in international capital flows, cross-border financial positions and exchange rates and an analysis of global capital flows. Section 2 presents trends from a global perspective, focusing on the large economies and groups of countries that are decisive for the overall picture. The authors combine up-to-date evidence from balance-of-payments statistics concerning transactions and s...

is gratefully acknowledged. We are also grateful to Marek Dabrowski, Maria Demertzis, Zsolt Darva... more is gratefully acknowledged. We are also grateful to Marek Dabrowski, Maria Demertzis, Zsolt Darvas and Nicolas Veron for their comments on a previous draft of this report. The usual disclaimer applies.

Intereconomics, 2018

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch ge... more Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.

SSRN Electronic Journal, 2015

The distinction of risk vs uncertainty as made by Knight has important implications for policy se... more The distinction of risk vs uncertainty as made by Knight has important implications for policy selection. Assuming the former when the latter is relevant can lead to wrong decisions. With the aid of a stylized model that describes a bank's decision on how to allocate loans, we discuss decision making under Knightian uncertainty. We use the infogap robust satisficing approach to derive a trade-off between confidence and performance (somewhat analogous to confidence intervals in the Bayesian approach but without assignment of probabilities). We then contrast how decisions change when following this approach by comparison to the other main non-probabilistic approach available in the literature, namely min-max.

ABSTRACT This paper calculates indices of central bank autonomy (CBA) for 163 central banks as of... more ABSTRACT This paper calculates indices of central bank autonomy (CBA) for 163 central banks as of end-2003, and comparable indices for a subgroup of 68 central banks as of the end of the 1980s. The results confirm strong improvements in both economic and political CBA over the past couple of decades, although more progress is needed to boost political autonomy of the central banks in emerging market and developing countries. Our analysis confirms that greater CBA has on average helped to maintain low inflation levels. The paper identifies four broad principles of CBA that have been shared by the majority of countries. Significant differences exist in the area of banking supervision where many central banks have retained a key role. Finally, we discuss the sequencing of reforms to separate the conduct of monetary and fiscal policies. IMF Staff Papers (2009) 56, 263–296. doi:10.1057/imfsp.2008.25; published online 23 September 2008

Reflections on 25 Years of the Hypothesis

The size and economic relevance of Europe may imply a new role for the EURO in the international ... more The size and economic relevance of Europe may imply a new role for the EURO in the international financial markets. But will the EURO compete with the $US and the Yen for a place in the basket of international currencies? Will that induce a bipolar or indeed tri-polar system, and with what consequences? Two important uncertainties arise from the fact that the long run trend of the EURO depends on the economic performance of the partner countries as well as on the properties of the new currency. They are: a) the international use of the EURO in trade, as well as its effect on the stability of the foreign exchange markets more generally, and b) the implementation of monetary and fiscal policies: how the new European policy mix will affect the degree of international policy co-ordination and exchange rate management. Much of this uncertainty is due to the fact that some of the effects will work in opposite directions and many will be felt gradually (primarily those that are dependent o...

Journal of Macroeconomics, 2007

We study the e¤ects of Central Bank transparency on in ‡ation and the output gap. We thus …rst id... more We study the e¤ects of Central Bank transparency on in ‡ation and the output gap. We thus …rst identify a small analytical model which concludes that transparency a¤ects the variability of in ‡ation and output and not their average levels. Then we examine whether this conjecture holds empirically, employing the recently derived index of transparency by Eij¢nger and Geraats. The empirical …ndings con…rm that the averages are not a¤ected by transparency. It does seem to explain however, about 50% of the variability in in ‡ation. The relation between transparency and output volatility is less clear but appears to be positive rather than negative.

Journal of International Money and Finance, 2008

European Journal of Political Economy, 2004