SlideShare a Scribd company logo
University of Leipzig
Faculty of Business and Economics
Institute for Economic Policy
Prof. Dr. Gunther Schnabl
Inflation and Other Consequences of the ECB’s
Monetary Policy
CEQLS Lecture
Bratislava, 23.5.2022
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 1
1. Introduction
2. Hayek’s Monetary Overinvestment Theory
3. Asymmetric Monetary and Fiscal Policies
4. Inflation, Growth and Distribution
5. Outlook
References
Hayek, Friedrich 1935: Prices and Production. 2nd ed. Augustus M.
Kelley, Clifton, NJ.
Mayer, Thomas / Schnabl, Gunther 2021: Reasons for the Demise of
the Interest: Savings Glut and Secular Stagnation or Central Bank
Policy? Quarterly Journal of Austrian Economics 24, 1, 3-40.
Schnabl, Gunther 2019: Central Banking and Crisis Management from
the Perspective of Austrian Business Cycle Theory. The Oxford
Handbook of the Economics of Central Banking, 551-584.
Contents
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 2
3
1. Corona-Crisis, Climate-Crisis, Ukraine-Crisis
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy
Two Types of Crisis
• The Government responds to economic crisis or financial crisis.
• Forward-looking: The government foresees a crisis and takes
preventive action. The resulting economic crisis triggers economic
stabilization measures (corona-virus crisis, climate crisis).
Economic Policy Response Patterns
• Rescue credit and recapitalization (debt-financed),
• economic stimulus programs (debt-financed),
• monetary expansion (purchases of government bonds).
Institutional Changes
• Monetary policy rules ignored,
• debt-rules (temporarily) suspended (Germany, EU),
• revival of industrial and structural policy.
4
ECB Crisis Management
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy
2. Hayek‘s Monetary Overinvestment Theory
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 5
Wicksell, Mises, Schumpeter and Hayek
• The overinvestment theories of Wicksell (1898), Mises (1912),
Schumpeter (1912) and Hayek (1929)
• explain business cycles with distorted relative prices on capital
markets.
Interest Rate Concepts
• ii = internal interest rate: real return on investment.
• in = natural interest rate: long-term equilibrium rate (S=I).
• icb = central bank rate: interest rate set by the central bank rate.
• ic = interest rate set by the banking sector for credits.
• Under normal conditions: icb=ic (for parsimony).
Starting Points of the Cycle
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 6
Innovation (exogenous) (Schumpeter 1912; Hayek 1929, 1935)
• Technical innovations increase the internal interest rate of
investment. The investment curve shifs to the right.
• Innovation in the financial market (US mortgage market), new
markets (dotcom), emerging markets (China, Central and Eastern
Europe), etc. can trigger overinvestment cycles.
Interest Rate Cut
• Domestic interest rate cuts by central banks (Japan, US, euro area)
drive innovation and irrational exuberance.
• Foreign monetary impulses lead to capital inflows, growing
investment and financial market exuberance (East Asian "tiger
states", southern, central and eastern Europe 2001-2007).
The Upswing
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 7
i
S
Iii1
Iii2
I2
I, S
I1 = S1
S2
in2
in1 = icb1=ic1
= icb2 = ic2
positive interest margin
Starting point: Innovation (Schumpter, Hayek), central bank mistakes
(Wicksell, Mises, Hayek), financial market competition (Hayek).
I2 > S2
8
Turnaround and Downswing
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy
Starting point: Interest rate increase or changing mood of banks.
i
S
Iii3
Iii2
I3
I, S
S3
icb3=ic3
in3
negative interest margin
S3 > I3
3. Asymmetric Monetary and Fiscal Policies
Type 1 Monetary Policy Mistake
• During the upswing the central bank keeps the interest rate below
the natural interest rate (for too long) (in2>icb2),
• which triggers (new) overinvestment cycles.
Type 2 Monetary Policy Mistake (World Economic Crisis)
• The interest rate is held too high during the downswing (in3<icb3),
• which aggravates the crisis.
In Practice (Jackson Hole Consensus)
• Type 2 monetary policy mistakes are avoided.
• Type 1 monetary policy mistakes prevail.
• Type 2 monetary policy mistakes tend to be transformed into type
1 monetary policy mistakes.
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 9
G3 Short-term Interest Rates
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 10
Source: Refinitiv, IFS; arithmetic averages.
-4
-2
0
2
4
6
8
10
12
14
1980 1985 1990 1995 2000 2005 2010 2015 2020
Percent
Nominal
Real
General Government Debt of EMU
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 11
Source: European Commission.
40
50
60
70
80
90
100
1999 2002 2005 2008 2011 2014 2017 2020
Percent
of
GDP
G3 Central Bank Balance Sheets
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 12
Source: BoJ, Fed, ECB.
0
20
40
60
80
100
120
140
0
10
20
30
40
50
60
70
80
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Percent
of
GDP
Percent
of
GDP
ECB (l.h.s.)
FED (l.h.s.)
BoJ (r.h.s.)
Monetary Overhang in the Euro Area
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 13
Source: ECB.
100
200
300
400
500
600
700
1999 2004 2009 2014 2019
Index:
1999:Q1=100
M1 Real GDP
Definitions of Inflation
• “Prices do not stay constant, they are always rising and declining. An increase
in the money supply – inflation properly defined – has a tendency to raise them
in general.” (Rothbard)
• “A large increase in the money supply would have the accompanying effects -
like price increases.” (Mises).
• “In the euro area, the Harmonised Index of Consumer Prices (HICP) is used
to measure consumer price inflation. That means the change over time in the
prices of consumer goods and services purchased by euro area households.”
(ECB).
Types of Inflation
• Official consumer price inflation,
• asset price inflation (stocks),
• real estate price inflation,
• hidden inflation: (quality adjustment, weight adjustment),
• perceived inflation.
4. Inflation, Growth and Distribution Effects
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 14
Consumer and Asset Price Inflation
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 15
Source: Refinitiv.
0
50
100
150
200
250
300
350
400
1/1/99 1/1/03 1/1/07 1/1/11 1/1/15 1/1/19
Index
1999:01
=
100
Euro Area HICP
Eurostoxx 50
DAX
Dow Jones Industrials
Wandering Bubbles (Schnabl and Hoffmann 2008)
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 16
Source: IMF, FTSE, China Statistical Office.
0
200
400
600
800
1000
1200
1400
1600
1800
2000
0
50
100
150
200
250
300
350
400
450
500
1980 1985 1990 1995 2000 2005 2010 2015 2020
Index:
1994=100
Index:
1994=100
(Malaysia:
1990=100)
Nareit (linke Achse)
Japan, Nikkei (linke Achse)
Malaysia (linke Achse)
NASDAQ (rechte Achse)
Consumer Price Inflation in the Euro Area
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 17
Source: ECB, Destatis.
-4
-2
0
2
4
6
8
10
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Prozent
Deutschland
Euroraum
EZB Referenzwert
Spain
Perceived Inflation in the Euro Area
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 18
Source: European Commission.
-2
0
2
4
6
8
10
12
14
16
2004 2007 2010 2013 2016 2019 2022
Percent
Officially measured inflation (HICP)
Perceived inflation (median)
Monetary Policy and Raw Material Prices
• Low interest rates boost aggregate demand and the demand for
energy and raw materials.
• Weakening confidence in fiat currencies triggers a flight into
tangible assets (stocks, real estate, raw materials).
• As raw materials are traded in dollars (and euros), the exporters
hold large dollar (and euro) reserves. Because inflation in the
United States and the euro area devalues these assets in real terms,
there is an incentive lift prices of raw materials.
• If inflation expectations become permanent, hoarding sets in.
• If the euro depreciates against the dollar, raw material prices in
euro rise.
Reminiscent of the 1970s?
• Inflation started earlier (Vietnam war).
• This caused political instability and war (Yom Kippur)
• Raw material exporters increased prices (OPEC),
• which reinforced political instability globally.
Monetary Policy, Energy Prices, War and Inflation
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 19
Financial Repression (McKinnon 1973)
• Interest rate controls and state-directed capital allocation.
• Allocation function of interest rate disturbed.
• Interest rate margins of banks depressed (negative interest rates).
• Conditional liquidity provision by the ECB (TLTROs).
• Declining demand for credit by enterprises (credit crunch).
Negative Growth Effects (Hoffmann and Schnabl 2006)
• Interest rate increases in crises depressed.
• Rescue measures in case of crisis
• and gradually declining financing costs,
• reduce pressure on corporations to increase efficiency.
• Quasi “Soft Budget Constraints” (Kornai 1986).
• Zombification and
• declining aggregate productivity gains.
Long-term Growth Effects
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 20
Credit Allocation in the Market Economy
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 21
Savings Credit
Households Banks Corporations
6%
4%
2%
credit interest rate
deposit rate
Future EU/ECB Credit Allocation?
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 22
Credit Credit
ECB Banks Corporations
-0,5%
-1%
Soft Budget Constraint (Kornai 1986)
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 23
Source: OECD.
€
€
Trade Conflict Channel
• Monetary policies have strong distribution effects.
• Political discontent among voters is growing.
• This makes them open for politicians stressing national interest.
• Trade barriers become a widely acknowledged policy tool.
• Via retorsion measures trade impediments spread globally.
Regulation Channel
• Regulations are usually justified with consumer protection.
• They have redistribution effects across sectors (lobbyism).
• In sectors, which are negatively affected by regulation,
unemployment emerges.
• As governments subsidize enterprises, they can prevent
unemployment.
• Regulations for international production and transport flourish.
Monetary Policy and Deglobalization
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 24
Distribution Effects
From Creditor to Debtor / From Private to Public
• Via financial repression.
From Enterprise Sector to Financial Sector
• Via inflation of financial markets, repressing consumption.
From Poor to Rich
• Via asset price inflation, financial repression.
From Young to Old
• Via nominal wage repression, increasing real estate prices.
From Small to Large Enterprises / Financial Institutions
• Via capital market financing versus bank-based financing.
From Periphery to Economic Centres
• Via concentration effects of monetary policy.
From Current Account Surplus to Deficit Countries
• Via current account surpluses and TARGET2-balances.
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 25
Japan: Nominal Wages and Employment
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 26
Quelle: 総務省, Japan: Ministry of Internal Affairs and Communication.
38
43
48
53
58
100
105
110
115
120
125
130
Q2 1980 Q2 1987 Q2 1994 Q2 2001 Q2 2008 Q2 2015
Millions
Index
(100=1980)
Real wages
Total employment (rhs)
USA: Stock Prices and Income Inequality
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 27
Quelle: Thomson Reuters, Top Income Database.
10
12
14
16
18
20
22
24
0
20
40
60
80
100
120
140
160
180
1950 1960 1970 1980 1990 2000 2010 2020
Percent
Index
2015=100
NYSE (l.h.s.)
Top 1% Income Share, USA (r.h.s.)
5. Implications for E(M)U and Exit Options
The Creeping Transformation of the Economic System
• The monetary policy the ECB favours government expenditure
and regulation,
• which implies a gradual move away from market principles
(liability) towards principles as they prevailed in the socialist
planning economies.
• The wealth position of growing parts of the population is
deteriorating, distribution conflicts rise and political polarization
occurs.
Exit Strategies
• Monetary stabilisation is the prerequisite for economic and political
stabilisation.
• A decisive gradual increase of interest rates would be an exit
strategy based on the current monetary system (Paul Volcker).
• Alternative monetary systems outside the reach of policy makers
(Hayek 1976) are a new gold, or a bitcoin standard.
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 28
Thank you very much for your attention!
Twitter: @Gunther Schnabl
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 29
Long-term Interest Rates in Germany and USA
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 30
Source: Thomsen Reuters.
-2
0
2
4
6
8
10
12
14
16
1980 1985 1990 1995 2000 2005 2010 2015 2020
Percent
United States
Germany
Real Estate Prices in a Dyfunctional Monetary Union
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 31
Source: OECD.
100
120
140
160
180
200
220
240
260
280
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Index
(Q1
1999
=
100)
Euroraum
Spanien
Deutschland
The Upswing Explained
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 32
• Innovations in the real and financial sector or the discovery of new
markets stimulate investment (from Iii1 to Iii2).
• A credit boom is triggered when the additional capital demand of
enterprises is satisfied at unchanged interest rates (ic1 = icb1 = ic2),
which mimics an increase in savings (future consumption).
• The credit expansion leads to increasing investment at unchanged
interest rates.
• The natural interest rate increases (from in1 to in2).
• Idle capacities are used. Then, with higher investment, demand for
labor and thereby wages increase.
• Higher demand for consumer goods does not meet sufficient
supply as capacities are bound in the investment goods sector.
• As prices rise, higher profits are signaled, which triggers additional
investment.
• The perceived positive wealth effect of rising asset prices further
stimulates consumption and asset purchases of the household
sector, financed by low interest rates.
33
Turnaround and Downswing Explained
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy
• Rising prices and declining real wages motivate more labor-
intensive production reducing capital requirements per unit of
consumption output. Overall investment declines (Ricardo effect).
• Asset prices and consumer prices reach unsustainable limits. Credit
is tightened by the banking sector, or the central bank raises its
policy rate to fight inflation.
• With the central bank and capital market interest rates rising to
icb3=ic3, the threshold for the profitability of all previous and
future investment projects is lifted.
• Investment projects have to be dismantled (from Iii2 to Iii3) as a
cumulative downward process sets in. The natural rate of interest
declines to n3.
• The crisis is aggravated as the central bank keeps the policy rate
above the natural rate (icb3 > in3) and/or panic in financial markets
makes banks reluctant to provide credit (ic3 > in3).
• Bankruptcies and declining prices and wages are the basis for the
recovery (cleansing effect, Schumpeter 1912).
Concepts of Natural Interest Rates
Böhm-Bawerk (1890)
• The natural interest rate reflects the time preference of individuals.
Wicksell (1898: 102)
• “There is a certain rate of interest on loans which is neutral in respect to
commodity prices, and tends neither to raise nor to lower them.”
Hayek (1935)
• “It is the rate that tells the truth about the availability of resources for meeting
present and future consumer demands, allowing production plans to be kept in
line with the preferred pattern of consumption.”
Woodford (2003)
• The natural level of output is defined as the steady state value of
output (subject to stochastic shocks) under fully flexible prices and
the natural rate of interest is the real rate that prevails if output is
equal to its flexible price level.
May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 34

More Related Content

Similar to Gunther Schnabl: Inflation and Other Consequences of the ECB’s Monetary Policy

Where Next For The World Economy
Where Next For The World EconomyWhere Next For The World Economy
Where Next For The World Economy
Justin Patrie
 
Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Lo...
Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Lo...Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Lo...
Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Lo...
CASE Center for Social and Economic Research
 
Howard Nicholas - Global Economy Lecture - CREA June 2013
Howard Nicholas - Global Economy Lecture - CREA June 2013 Howard Nicholas - Global Economy Lecture - CREA June 2013
Howard Nicholas - Global Economy Lecture - CREA June 2013
kritischestudentenutrecht
 
Inflation and economic growth
Inflation and economic growthInflation and economic growth
Inflation and economic growth
Andrew Sheveliev
 
All bound up? Monetary policy in recovery and beyond
All bound up? Monetary policy in recovery and beyondAll bound up? Monetary policy in recovery and beyond
All bound up? Monetary policy in recovery and beyond
ResolutionFoundation
 
Copyright © UNU-WIDER 2009 UNU-WIDER, Helsinki, Finl.docx
Copyright  ©  UNU-WIDER 2009  UNU-WIDER, Helsinki, Finl.docxCopyright  ©  UNU-WIDER 2009  UNU-WIDER, Helsinki, Finl.docx
Copyright © UNU-WIDER 2009 UNU-WIDER, Helsinki, Finl.docx
maxinesmith73660
 
George perendia
George perendiaGeorge perendia
George perendia
LondonMet PGR Students
 
Consequences of Financial Crises
Consequences of Financial CrisesConsequences of Financial Crises
Consequences of Financial Crises
tutor2u
 
Quantitative Easing
Quantitative EasingQuantitative Easing
Quantitative Easing
tutor2u
 
George perendia
George perendiaGeorge perendia
George perendia
LondonMet PGR Students
 
603fafc95abf73a62ea02cf6_e-rossi_global_24nov2015.ppt
603fafc95abf73a62ea02cf6_e-rossi_global_24nov2015.ppt603fafc95abf73a62ea02cf6_e-rossi_global_24nov2015.ppt
603fafc95abf73a62ea02cf6_e-rossi_global_24nov2015.ppt
danial287696
 
Seminar economics uk_2012_eib_bnp version
Seminar economics uk_2012_eib_bnp versionSeminar economics uk_2012_eib_bnp version
Seminar economics uk_2012_eib_bnp version
Roger Claessens
 
Deflation
DeflationDeflation
Deflation
videoaakash15
 
Ec 111 week 5 b
Ec 111 week 5 bEc 111 week 5 b
Ec 111 week 5 b
Dan Curtis
 
Macro objectives
Macro objectivesMacro objectives
Macro objectives
mattbentley34
 
Trekking markets & more with Investrekk
Trekking markets & more with InvestrekkTrekking markets & more with Investrekk
Trekking markets & more with Investrekk
Inves Trekk
 
Inflation in India
Inflation in IndiaInflation in India
Inflation in India
haranadhreddy2
 
The Uncertainty Effect on HSR in EEU (2)
The Uncertainty Effect on HSR in EEU (2)The Uncertainty Effect on HSR in EEU (2)
The Uncertainty Effect on HSR in EEU (2)
Cristian Buzatu
 
Financial Analysis HINDALCO 2009
Financial Analysis HINDALCO 2009Financial Analysis HINDALCO 2009
Financial Analysis HINDALCO 2009
Govind Kumar Rai
 
Fixed income project quantitative easing
Fixed income project   quantitative easingFixed income project   quantitative easing
Fixed income project quantitative easing
Singapore Management University
 

Similar to Gunther Schnabl: Inflation and Other Consequences of the ECB’s Monetary Policy (20)

Where Next For The World Economy
Where Next For The World EconomyWhere Next For The World Economy
Where Next For The World Economy
 
Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Lo...
Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Lo...Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Lo...
Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Lo...
 
Howard Nicholas - Global Economy Lecture - CREA June 2013
Howard Nicholas - Global Economy Lecture - CREA June 2013 Howard Nicholas - Global Economy Lecture - CREA June 2013
Howard Nicholas - Global Economy Lecture - CREA June 2013
 
Inflation and economic growth
Inflation and economic growthInflation and economic growth
Inflation and economic growth
 
All bound up? Monetary policy in recovery and beyond
All bound up? Monetary policy in recovery and beyondAll bound up? Monetary policy in recovery and beyond
All bound up? Monetary policy in recovery and beyond
 
Copyright © UNU-WIDER 2009 UNU-WIDER, Helsinki, Finl.docx
Copyright  ©  UNU-WIDER 2009  UNU-WIDER, Helsinki, Finl.docxCopyright  ©  UNU-WIDER 2009  UNU-WIDER, Helsinki, Finl.docx
Copyright © UNU-WIDER 2009 UNU-WIDER, Helsinki, Finl.docx
 
George perendia
George perendiaGeorge perendia
George perendia
 
Consequences of Financial Crises
Consequences of Financial CrisesConsequences of Financial Crises
Consequences of Financial Crises
 
Quantitative Easing
Quantitative EasingQuantitative Easing
Quantitative Easing
 
George perendia
George perendiaGeorge perendia
George perendia
 
603fafc95abf73a62ea02cf6_e-rossi_global_24nov2015.ppt
603fafc95abf73a62ea02cf6_e-rossi_global_24nov2015.ppt603fafc95abf73a62ea02cf6_e-rossi_global_24nov2015.ppt
603fafc95abf73a62ea02cf6_e-rossi_global_24nov2015.ppt
 
Seminar economics uk_2012_eib_bnp version
Seminar economics uk_2012_eib_bnp versionSeminar economics uk_2012_eib_bnp version
Seminar economics uk_2012_eib_bnp version
 
Deflation
DeflationDeflation
Deflation
 
Ec 111 week 5 b
Ec 111 week 5 bEc 111 week 5 b
Ec 111 week 5 b
 
Macro objectives
Macro objectivesMacro objectives
Macro objectives
 
Trekking markets & more with Investrekk
Trekking markets & more with InvestrekkTrekking markets & more with Investrekk
Trekking markets & more with Investrekk
 
Inflation in India
Inflation in IndiaInflation in India
Inflation in India
 
The Uncertainty Effect on HSR in EEU (2)
The Uncertainty Effect on HSR in EEU (2)The Uncertainty Effect on HSR in EEU (2)
The Uncertainty Effect on HSR in EEU (2)
 
Financial Analysis HINDALCO 2009
Financial Analysis HINDALCO 2009Financial Analysis HINDALCO 2009
Financial Analysis HINDALCO 2009
 
Fixed income project quantitative easing
Fixed income project   quantitative easingFixed income project   quantitative easing
Fixed income project quantitative easing
 

More from Conservative Institute / Konzervatívny inštitút M. R. Štefánika

Odkaz Adama Smitha: Pohľady z Česka a Slovenska
Odkaz Adama Smitha: Pohľady z Česka a SlovenskaOdkaz Adama Smitha: Pohľady z Česka a Slovenska
Odkaz Adama Smitha: Pohľady z Česka a Slovenska
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia a i...
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia a i...Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia a i...
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia a i...
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Peter Gonda: Peniaze a menový a bankový systém. Centrálne bankovníctvo a jeho...
Peter Gonda: Peniaze a menový a bankový systém. Centrálne bankovníctvo a jeho...Peter Gonda: Peniaze a menový a bankový systém. Centrálne bankovníctvo a jeho...
Peter Gonda: Peniaze a menový a bankový systém. Centrálne bankovníctvo a jeho...
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Charlotta Stern: How the Swedish labor market really works
Charlotta Stern: How the Swedish labor market really worksCharlotta Stern: How the Swedish labor market really works
Charlotta Stern: How the Swedish labor market really works
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Daniel Klein: Adam Smith 300
Daniel Klein: Adam Smith 300Daniel Klein: Adam Smith 300
Na obranu slobodného trhu
Na obranu slobodného trhuNa obranu slobodného trhu
Gonda: Východiská a odkazy ekonómie liberálnych ekonomických škôl
Gonda: Východiská a odkazy ekonómie liberálnych ekonomických škôlGonda: Východiská a odkazy ekonómie liberálnych ekonomických škôl
Gonda: Východiská a odkazy ekonómie liberálnych ekonomických škôl
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Rainer Zitelmann: Myths and Facts About Capitalism
Rainer Zitelmann: Myths and Facts About CapitalismRainer Zitelmann: Myths and Facts About Capitalism
Rainer Zitelmann: Myths and Facts About Capitalism
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Friedrich Hayek a Milton Friedman a ich prínos pre súčasnosť
Friedrich Hayek a Milton Friedman a ich prínos pre súčasnosťFriedrich Hayek a Milton Friedman a ich prínos pre súčasnosť
Friedrich Hayek a Milton Friedman a ich prínos pre súčasnosť
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Peter Gonda: Miesto klasickej ekonomickej školy a iných liberálnych ekonomick...
Peter Gonda: Miesto klasickej ekonomickej školy a iných liberálnych ekonomick...Peter Gonda: Miesto klasickej ekonomickej školy a iných liberálnych ekonomick...
Peter Gonda: Miesto klasickej ekonomickej školy a iných liberálnych ekonomick...
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
David Friedman: Law, Economics and Liberty
David Friedman: Law, Economics and LibertyDavid Friedman: Law, Economics and Liberty
Stefan Kolev: German Economic Model: Past and Present | CEQLS Lecture
Stefan Kolev: German Economic Model: Past and Present | CEQLS LectureStefan Kolev: German Economic Model: Past and Present | CEQLS Lecture
Stefan Kolev: German Economic Model: Past and Present | CEQLS Lecture
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického mysleniaPeter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Peter Gonda: Konkurencia, regulácia a európska ekonomická integrácia
Peter Gonda: Konkurencia, regulácia a európska ekonomická integráciaPeter Gonda: Konkurencia, regulácia a európska ekonomická integrácia
Peter Gonda: Konkurencia, regulácia a európska ekonomická integrácia
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Peter Gonda: Možnosti riešenia sociálnych udalostí na báze osobnej zodpovednosti
Peter Gonda: Možnosti riešenia sociálnych udalostí na báze osobnej zodpovednostiPeter Gonda: Možnosti riešenia sociálnych udalostí na báze osobnej zodpovednosti
Peter Gonda: Možnosti riešenia sociálnych udalostí na báze osobnej zodpovednosti
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Peter Gonda: Peniaze a menový systém
Peter Gonda: Peniaze a menový systémPeter Gonda: Peniaze a menový systém
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Conservative Institute / Konzervatívny inštitút M. R. Štefánika
 

More from Conservative Institute / Konzervatívny inštitút M. R. Štefánika (20)

Odkaz Adama Smitha: Pohľady z Česka a Slovenska
Odkaz Adama Smitha: Pohľady z Česka a SlovenskaOdkaz Adama Smitha: Pohľady z Česka a Slovenska
Odkaz Adama Smitha: Pohľady z Česka a Slovenska
 
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia a i...
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia a i...Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia a i...
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia a i...
 
Peter Gonda: Peniaze a menový a bankový systém. Centrálne bankovníctvo a jeho...
Peter Gonda: Peniaze a menový a bankový systém. Centrálne bankovníctvo a jeho...Peter Gonda: Peniaze a menový a bankový systém. Centrálne bankovníctvo a jeho...
Peter Gonda: Peniaze a menový a bankový systém. Centrálne bankovníctvo a jeho...
 
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
 
Charlotta Stern: How the Swedish labor market really works
Charlotta Stern: How the Swedish labor market really worksCharlotta Stern: How the Swedish labor market really works
Charlotta Stern: How the Swedish labor market really works
 
Daniel Klein: Adam Smith 300
Daniel Klein: Adam Smith 300Daniel Klein: Adam Smith 300
Daniel Klein: Adam Smith 300
 
Na obranu slobodného trhu
Na obranu slobodného trhuNa obranu slobodného trhu
Na obranu slobodného trhu
 
Gonda: Východiská a odkazy ekonómie liberálnych ekonomických škôl
Gonda: Východiská a odkazy ekonómie liberálnych ekonomických škôlGonda: Východiská a odkazy ekonómie liberálnych ekonomických škôl
Gonda: Východiská a odkazy ekonómie liberálnych ekonomických škôl
 
Rainer Zitelmann: Myths and Facts About Capitalism
Rainer Zitelmann: Myths and Facts About CapitalismRainer Zitelmann: Myths and Facts About Capitalism
Rainer Zitelmann: Myths and Facts About Capitalism
 
Friedrich Hayek a Milton Friedman a ich prínos pre súčasnosť
Friedrich Hayek a Milton Friedman a ich prínos pre súčasnosťFriedrich Hayek a Milton Friedman a ich prínos pre súčasnosť
Friedrich Hayek a Milton Friedman a ich prínos pre súčasnosť
 
Peter Gonda: Miesto klasickej ekonomickej školy a iných liberálnych ekonomick...
Peter Gonda: Miesto klasickej ekonomickej školy a iných liberálnych ekonomick...Peter Gonda: Miesto klasickej ekonomickej školy a iných liberálnych ekonomick...
Peter Gonda: Miesto klasickej ekonomickej školy a iných liberálnych ekonomick...
 
David Friedman: Law, Economics and Liberty
David Friedman: Law, Economics and LibertyDavid Friedman: Law, Economics and Liberty
David Friedman: Law, Economics and Liberty
 
Stefan Kolev: German Economic Model: Past and Present | CEQLS Lecture
Stefan Kolev: German Economic Model: Past and Present | CEQLS LectureStefan Kolev: German Economic Model: Past and Present | CEQLS Lecture
Stefan Kolev: German Economic Model: Past and Present | CEQLS Lecture
 
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického mysleniaPeter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia
Peter Gonda: Podstata, základné princípy ekonómie a ekonomického myslenia
 
Peter Gonda: Konkurencia, regulácia a európska ekonomická integrácia
Peter Gonda: Konkurencia, regulácia a európska ekonomická integráciaPeter Gonda: Konkurencia, regulácia a európska ekonomická integrácia
Peter Gonda: Konkurencia, regulácia a európska ekonomická integrácia
 
Peter Gonda: Možnosti riešenia sociálnych udalostí na báze osobnej zodpovednosti
Peter Gonda: Možnosti riešenia sociálnych udalostí na báze osobnej zodpovednostiPeter Gonda: Možnosti riešenia sociálnych udalostí na báze osobnej zodpovednosti
Peter Gonda: Možnosti riešenia sociálnych udalostí na báze osobnej zodpovednosti
 
Socializmus: podstata, ekonomická realita a dôsledky
Socializmus: podstata, ekonomická realita a dôsledkySocializmus: podstata, ekonomická realita a dôsledky
Socializmus: podstata, ekonomická realita a dôsledky
 
Peter Gonda: Peniaze a menový systém
Peter Gonda: Peniaze a menový systémPeter Gonda: Peniaze a menový systém
Peter Gonda: Peniaze a menový systém
 
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
 
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
Peter Gonda: Možnosti riešenia negatívnych externalít bez vládnych regulácií ...
 

Recently uploaded

how to sell hamster kombat tokens for USD.
how to sell hamster kombat tokens for USD.how to sell hamster kombat tokens for USD.
how to sell hamster kombat tokens for USD.
CRYPTO SPACE 🪙
 
how to sell Tapswap token's at high rate - $1 per token
how to sell Tapswap token's at high rate - $1 per tokenhow to sell Tapswap token's at high rate - $1 per token
how to sell Tapswap token's at high rate - $1 per token
CRYPTO SPACE 🪙
 
How can i sell hamster kombat token on Binance exchange!
How can i sell hamster kombat token on Binance exchange!How can i sell hamster kombat token on Binance exchange!
How can i sell hamster kombat token on Binance exchange!
CRYPTO SPACE 🪙
 
hamster kombat - The best way to gain Massively as beginner's.
hamster kombat - The best way to gain Massively as beginner's.hamster kombat - The best way to gain Massively as beginner's.
hamster kombat - The best way to gain Massively as beginner's.
CRYPTO SPACE 🪙
 
Economic Risk Factor Update: July 2024 [SlideShare]
Economic Risk Factor Update: July 2024 [SlideShare]Economic Risk Factor Update: July 2024 [SlideShare]
Economic Risk Factor Update: July 2024 [SlideShare]
Commonwealth
 
Lucknow Girls Call Kesar Bagh 08630512678 Provide Best And Top Girl Service A...
Lucknow Girls Call Kesar Bagh 08630512678 Provide Best And Top Girl Service A...Lucknow Girls Call Kesar Bagh 08630512678 Provide Best And Top Girl Service A...
Lucknow Girls Call Kesar Bagh 08630512678 Provide Best And Top Girl Service A...
eshikajshani
 
What is the Secret way of selling hamster kombat tokens online?
What is the Secret way of selling hamster kombat tokens online?What is the Secret way of selling hamster kombat tokens online?
What is the Secret way of selling hamster kombat tokens online?
CRYPTO SPACE 🪙
 
Girls call Service Hyderabad 000XX00000 Provide Best And Top Girl Service And...
Girls call Service Hyderabad 000XX00000 Provide Best And Top Girl Service And...Girls call Service Hyderabad 000XX00000 Provide Best And Top Girl Service And...
Girls call Service Hyderabad 000XX00000 Provide Best And Top Girl Service And...
avanikakapoor
 
where to buy and sell hamster kombat tokens 🐹
where to buy and sell hamster kombat tokens 🐹where to buy and sell hamster kombat tokens 🐹
where to buy and sell hamster kombat tokens 🐹
CRYPTO SPACE 🪙
 
Perfect trading ebook - is it a legitimate forex trading Ebook or SCAM!
Perfect trading ebook - is it a legitimate forex trading Ebook or SCAM!Perfect trading ebook - is it a legitimate forex trading Ebook or SCAM!
Perfect trading ebook - is it a legitimate forex trading Ebook or SCAM!
TRADERS SPACE 💱
 
Girls Call Laxmi Nagar 9711199171 Provide Best And Top Girl Service And No1 i...
Girls Call Laxmi Nagar 9711199171 Provide Best And Top Girl Service And No1 i...Girls Call Laxmi Nagar 9711199171 Provide Best And Top Girl Service And No1 i...
Girls Call Laxmi Nagar 9711199171 Provide Best And Top Girl Service And No1 i...
Ak47
 
how can I convert hamster kombat to other cryptocurrency - BITCOIN, USDT, BNB.
how can I convert hamster kombat to other cryptocurrency -  BITCOIN, USDT, BNB.how can I convert hamster kombat to other cryptocurrency -  BITCOIN, USDT, BNB.
how can I convert hamster kombat to other cryptocurrency - BITCOIN, USDT, BNB.
CRYPTO SPACE 🪙
 
Girls Call DN Nagar 9910780858 Provide Best And Top Girl Service And No1 in City
Girls Call DN Nagar 9910780858 Provide Best And Top Girl Service And No1 in CityGirls Call DN Nagar 9910780858 Provide Best And Top Girl Service And No1 in City
Girls Call DN Nagar 9910780858 Provide Best And Top Girl Service And No1 in City
margaretblush
 
2024 Q2 Crypto Industry Report | CoinGecko
2024 Q2 Crypto Industry Report | CoinGecko2024 Q2 Crypto Industry Report | CoinGecko
2024 Q2 Crypto Industry Report | CoinGecko
CoinGecko
 
Can I sell my hamster kombat tokens Now! (latest update - 2024)
Can I sell my hamster kombat tokens Now! (latest update - 2024)Can I sell my hamster kombat tokens Now! (latest update - 2024)
Can I sell my hamster kombat tokens Now! (latest update - 2024)
CRYPTO SPACE 🪙
 
hamster kombat airdrop - official launch date revealed.
hamster kombat airdrop - official launch date revealed.hamster kombat airdrop - official launch date revealed.
hamster kombat airdrop - official launch date revealed.
CRYPTO SPACE 🪙
 
Monthly Market Risk Update: July 2024 [SlideShare]
Monthly Market Risk Update: July 2024 [SlideShare]Monthly Market Risk Update: July 2024 [SlideShare]
Monthly Market Risk Update: July 2024 [SlideShare]
Commonwealth
 
Lucknow Girls Call Adil Nagar 08630512678 Available full Day
Lucknow Girls Call Adil Nagar 08630512678 Available full DayLucknow Girls Call Adil Nagar 08630512678 Available full Day
Lucknow Girls Call Adil Nagar 08630512678 Available full Day
annarivihqrika
 
20240710 Calibre Mining 2024 Investor Presentation.pdf
20240710 Calibre Mining 2024 Investor Presentation.pdf20240710 Calibre Mining 2024 Investor Presentation.pdf
20240710 Calibre Mining 2024 Investor Presentation.pdf
Adnet Communications
 
how to successfully withdraw hamster tokens to TON - WALLET
how to successfully withdraw hamster tokens to TON - WALLEThow to successfully withdraw hamster tokens to TON - WALLET
how to successfully withdraw hamster tokens to TON - WALLET
CRYPTO SPACE 🪙
 

Recently uploaded (20)

how to sell hamster kombat tokens for USD.
how to sell hamster kombat tokens for USD.how to sell hamster kombat tokens for USD.
how to sell hamster kombat tokens for USD.
 
how to sell Tapswap token's at high rate - $1 per token
how to sell Tapswap token's at high rate - $1 per tokenhow to sell Tapswap token's at high rate - $1 per token
how to sell Tapswap token's at high rate - $1 per token
 
How can i sell hamster kombat token on Binance exchange!
How can i sell hamster kombat token on Binance exchange!How can i sell hamster kombat token on Binance exchange!
How can i sell hamster kombat token on Binance exchange!
 
hamster kombat - The best way to gain Massively as beginner's.
hamster kombat - The best way to gain Massively as beginner's.hamster kombat - The best way to gain Massively as beginner's.
hamster kombat - The best way to gain Massively as beginner's.
 
Economic Risk Factor Update: July 2024 [SlideShare]
Economic Risk Factor Update: July 2024 [SlideShare]Economic Risk Factor Update: July 2024 [SlideShare]
Economic Risk Factor Update: July 2024 [SlideShare]
 
Lucknow Girls Call Kesar Bagh 08630512678 Provide Best And Top Girl Service A...
Lucknow Girls Call Kesar Bagh 08630512678 Provide Best And Top Girl Service A...Lucknow Girls Call Kesar Bagh 08630512678 Provide Best And Top Girl Service A...
Lucknow Girls Call Kesar Bagh 08630512678 Provide Best And Top Girl Service A...
 
What is the Secret way of selling hamster kombat tokens online?
What is the Secret way of selling hamster kombat tokens online?What is the Secret way of selling hamster kombat tokens online?
What is the Secret way of selling hamster kombat tokens online?
 
Girls call Service Hyderabad 000XX00000 Provide Best And Top Girl Service And...
Girls call Service Hyderabad 000XX00000 Provide Best And Top Girl Service And...Girls call Service Hyderabad 000XX00000 Provide Best And Top Girl Service And...
Girls call Service Hyderabad 000XX00000 Provide Best And Top Girl Service And...
 
where to buy and sell hamster kombat tokens 🐹
where to buy and sell hamster kombat tokens 🐹where to buy and sell hamster kombat tokens 🐹
where to buy and sell hamster kombat tokens 🐹
 
Perfect trading ebook - is it a legitimate forex trading Ebook or SCAM!
Perfect trading ebook - is it a legitimate forex trading Ebook or SCAM!Perfect trading ebook - is it a legitimate forex trading Ebook or SCAM!
Perfect trading ebook - is it a legitimate forex trading Ebook or SCAM!
 
Girls Call Laxmi Nagar 9711199171 Provide Best And Top Girl Service And No1 i...
Girls Call Laxmi Nagar 9711199171 Provide Best And Top Girl Service And No1 i...Girls Call Laxmi Nagar 9711199171 Provide Best And Top Girl Service And No1 i...
Girls Call Laxmi Nagar 9711199171 Provide Best And Top Girl Service And No1 i...
 
how can I convert hamster kombat to other cryptocurrency - BITCOIN, USDT, BNB.
how can I convert hamster kombat to other cryptocurrency -  BITCOIN, USDT, BNB.how can I convert hamster kombat to other cryptocurrency -  BITCOIN, USDT, BNB.
how can I convert hamster kombat to other cryptocurrency - BITCOIN, USDT, BNB.
 
Girls Call DN Nagar 9910780858 Provide Best And Top Girl Service And No1 in City
Girls Call DN Nagar 9910780858 Provide Best And Top Girl Service And No1 in CityGirls Call DN Nagar 9910780858 Provide Best And Top Girl Service And No1 in City
Girls Call DN Nagar 9910780858 Provide Best And Top Girl Service And No1 in City
 
2024 Q2 Crypto Industry Report | CoinGecko
2024 Q2 Crypto Industry Report | CoinGecko2024 Q2 Crypto Industry Report | CoinGecko
2024 Q2 Crypto Industry Report | CoinGecko
 
Can I sell my hamster kombat tokens Now! (latest update - 2024)
Can I sell my hamster kombat tokens Now! (latest update - 2024)Can I sell my hamster kombat tokens Now! (latest update - 2024)
Can I sell my hamster kombat tokens Now! (latest update - 2024)
 
hamster kombat airdrop - official launch date revealed.
hamster kombat airdrop - official launch date revealed.hamster kombat airdrop - official launch date revealed.
hamster kombat airdrop - official launch date revealed.
 
Monthly Market Risk Update: July 2024 [SlideShare]
Monthly Market Risk Update: July 2024 [SlideShare]Monthly Market Risk Update: July 2024 [SlideShare]
Monthly Market Risk Update: July 2024 [SlideShare]
 
Lucknow Girls Call Adil Nagar 08630512678 Available full Day
Lucknow Girls Call Adil Nagar 08630512678 Available full DayLucknow Girls Call Adil Nagar 08630512678 Available full Day
Lucknow Girls Call Adil Nagar 08630512678 Available full Day
 
20240710 Calibre Mining 2024 Investor Presentation.pdf
20240710 Calibre Mining 2024 Investor Presentation.pdf20240710 Calibre Mining 2024 Investor Presentation.pdf
20240710 Calibre Mining 2024 Investor Presentation.pdf
 
how to successfully withdraw hamster tokens to TON - WALLET
how to successfully withdraw hamster tokens to TON - WALLEThow to successfully withdraw hamster tokens to TON - WALLET
how to successfully withdraw hamster tokens to TON - WALLET
 

Gunther Schnabl: Inflation and Other Consequences of the ECB’s Monetary Policy

  • 1. University of Leipzig Faculty of Business and Economics Institute for Economic Policy Prof. Dr. Gunther Schnabl Inflation and Other Consequences of the ECB’s Monetary Policy CEQLS Lecture Bratislava, 23.5.2022 May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 1
  • 2. 1. Introduction 2. Hayek’s Monetary Overinvestment Theory 3. Asymmetric Monetary and Fiscal Policies 4. Inflation, Growth and Distribution 5. Outlook References Hayek, Friedrich 1935: Prices and Production. 2nd ed. Augustus M. Kelley, Clifton, NJ. Mayer, Thomas / Schnabl, Gunther 2021: Reasons for the Demise of the Interest: Savings Glut and Secular Stagnation or Central Bank Policy? Quarterly Journal of Austrian Economics 24, 1, 3-40. Schnabl, Gunther 2019: Central Banking and Crisis Management from the Perspective of Austrian Business Cycle Theory. The Oxford Handbook of the Economics of Central Banking, 551-584. Contents May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 2
  • 3. 3 1. Corona-Crisis, Climate-Crisis, Ukraine-Crisis May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy Two Types of Crisis • The Government responds to economic crisis or financial crisis. • Forward-looking: The government foresees a crisis and takes preventive action. The resulting economic crisis triggers economic stabilization measures (corona-virus crisis, climate crisis). Economic Policy Response Patterns • Rescue credit and recapitalization (debt-financed), • economic stimulus programs (debt-financed), • monetary expansion (purchases of government bonds). Institutional Changes • Monetary policy rules ignored, • debt-rules (temporarily) suspended (Germany, EU), • revival of industrial and structural policy.
  • 4. 4 ECB Crisis Management May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy
  • 5. 2. Hayek‘s Monetary Overinvestment Theory May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 5 Wicksell, Mises, Schumpeter and Hayek • The overinvestment theories of Wicksell (1898), Mises (1912), Schumpeter (1912) and Hayek (1929) • explain business cycles with distorted relative prices on capital markets. Interest Rate Concepts • ii = internal interest rate: real return on investment. • in = natural interest rate: long-term equilibrium rate (S=I). • icb = central bank rate: interest rate set by the central bank rate. • ic = interest rate set by the banking sector for credits. • Under normal conditions: icb=ic (for parsimony).
  • 6. Starting Points of the Cycle May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 6 Innovation (exogenous) (Schumpeter 1912; Hayek 1929, 1935) • Technical innovations increase the internal interest rate of investment. The investment curve shifs to the right. • Innovation in the financial market (US mortgage market), new markets (dotcom), emerging markets (China, Central and Eastern Europe), etc. can trigger overinvestment cycles. Interest Rate Cut • Domestic interest rate cuts by central banks (Japan, US, euro area) drive innovation and irrational exuberance. • Foreign monetary impulses lead to capital inflows, growing investment and financial market exuberance (East Asian "tiger states", southern, central and eastern Europe 2001-2007).
  • 7. The Upswing May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 7 i S Iii1 Iii2 I2 I, S I1 = S1 S2 in2 in1 = icb1=ic1 = icb2 = ic2 positive interest margin Starting point: Innovation (Schumpter, Hayek), central bank mistakes (Wicksell, Mises, Hayek), financial market competition (Hayek). I2 > S2
  • 8. 8 Turnaround and Downswing May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy Starting point: Interest rate increase or changing mood of banks. i S Iii3 Iii2 I3 I, S S3 icb3=ic3 in3 negative interest margin S3 > I3
  • 9. 3. Asymmetric Monetary and Fiscal Policies Type 1 Monetary Policy Mistake • During the upswing the central bank keeps the interest rate below the natural interest rate (for too long) (in2>icb2), • which triggers (new) overinvestment cycles. Type 2 Monetary Policy Mistake (World Economic Crisis) • The interest rate is held too high during the downswing (in3<icb3), • which aggravates the crisis. In Practice (Jackson Hole Consensus) • Type 2 monetary policy mistakes are avoided. • Type 1 monetary policy mistakes prevail. • Type 2 monetary policy mistakes tend to be transformed into type 1 monetary policy mistakes. May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 9
  • 10. G3 Short-term Interest Rates May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 10 Source: Refinitiv, IFS; arithmetic averages. -4 -2 0 2 4 6 8 10 12 14 1980 1985 1990 1995 2000 2005 2010 2015 2020 Percent Nominal Real
  • 11. General Government Debt of EMU May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 11 Source: European Commission. 40 50 60 70 80 90 100 1999 2002 2005 2008 2011 2014 2017 2020 Percent of GDP
  • 12. G3 Central Bank Balance Sheets May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 12 Source: BoJ, Fed, ECB. 0 20 40 60 80 100 120 140 0 10 20 30 40 50 60 70 80 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Percent of GDP Percent of GDP ECB (l.h.s.) FED (l.h.s.) BoJ (r.h.s.)
  • 13. Monetary Overhang in the Euro Area May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 13 Source: ECB. 100 200 300 400 500 600 700 1999 2004 2009 2014 2019 Index: 1999:Q1=100 M1 Real GDP
  • 14. Definitions of Inflation • “Prices do not stay constant, they are always rising and declining. An increase in the money supply – inflation properly defined – has a tendency to raise them in general.” (Rothbard) • “A large increase in the money supply would have the accompanying effects - like price increases.” (Mises). • “In the euro area, the Harmonised Index of Consumer Prices (HICP) is used to measure consumer price inflation. That means the change over time in the prices of consumer goods and services purchased by euro area households.” (ECB). Types of Inflation • Official consumer price inflation, • asset price inflation (stocks), • real estate price inflation, • hidden inflation: (quality adjustment, weight adjustment), • perceived inflation. 4. Inflation, Growth and Distribution Effects May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 14
  • 15. Consumer and Asset Price Inflation May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 15 Source: Refinitiv. 0 50 100 150 200 250 300 350 400 1/1/99 1/1/03 1/1/07 1/1/11 1/1/15 1/1/19 Index 1999:01 = 100 Euro Area HICP Eurostoxx 50 DAX Dow Jones Industrials
  • 16. Wandering Bubbles (Schnabl and Hoffmann 2008) May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 16 Source: IMF, FTSE, China Statistical Office. 0 200 400 600 800 1000 1200 1400 1600 1800 2000 0 50 100 150 200 250 300 350 400 450 500 1980 1985 1990 1995 2000 2005 2010 2015 2020 Index: 1994=100 Index: 1994=100 (Malaysia: 1990=100) Nareit (linke Achse) Japan, Nikkei (linke Achse) Malaysia (linke Achse) NASDAQ (rechte Achse)
  • 17. Consumer Price Inflation in the Euro Area May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 17 Source: ECB, Destatis. -4 -2 0 2 4 6 8 10 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Prozent Deutschland Euroraum EZB Referenzwert Spain
  • 18. Perceived Inflation in the Euro Area May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 18 Source: European Commission. -2 0 2 4 6 8 10 12 14 16 2004 2007 2010 2013 2016 2019 2022 Percent Officially measured inflation (HICP) Perceived inflation (median)
  • 19. Monetary Policy and Raw Material Prices • Low interest rates boost aggregate demand and the demand for energy and raw materials. • Weakening confidence in fiat currencies triggers a flight into tangible assets (stocks, real estate, raw materials). • As raw materials are traded in dollars (and euros), the exporters hold large dollar (and euro) reserves. Because inflation in the United States and the euro area devalues these assets in real terms, there is an incentive lift prices of raw materials. • If inflation expectations become permanent, hoarding sets in. • If the euro depreciates against the dollar, raw material prices in euro rise. Reminiscent of the 1970s? • Inflation started earlier (Vietnam war). • This caused political instability and war (Yom Kippur) • Raw material exporters increased prices (OPEC), • which reinforced political instability globally. Monetary Policy, Energy Prices, War and Inflation May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 19
  • 20. Financial Repression (McKinnon 1973) • Interest rate controls and state-directed capital allocation. • Allocation function of interest rate disturbed. • Interest rate margins of banks depressed (negative interest rates). • Conditional liquidity provision by the ECB (TLTROs). • Declining demand for credit by enterprises (credit crunch). Negative Growth Effects (Hoffmann and Schnabl 2006) • Interest rate increases in crises depressed. • Rescue measures in case of crisis • and gradually declining financing costs, • reduce pressure on corporations to increase efficiency. • Quasi “Soft Budget Constraints” (Kornai 1986). • Zombification and • declining aggregate productivity gains. Long-term Growth Effects May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 20
  • 21. Credit Allocation in the Market Economy May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 21 Savings Credit Households Banks Corporations 6% 4% 2% credit interest rate deposit rate
  • 22. Future EU/ECB Credit Allocation? May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 22 Credit Credit ECB Banks Corporations -0,5% -1%
  • 23. Soft Budget Constraint (Kornai 1986) May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 23 Source: OECD. € €
  • 24. Trade Conflict Channel • Monetary policies have strong distribution effects. • Political discontent among voters is growing. • This makes them open for politicians stressing national interest. • Trade barriers become a widely acknowledged policy tool. • Via retorsion measures trade impediments spread globally. Regulation Channel • Regulations are usually justified with consumer protection. • They have redistribution effects across sectors (lobbyism). • In sectors, which are negatively affected by regulation, unemployment emerges. • As governments subsidize enterprises, they can prevent unemployment. • Regulations for international production and transport flourish. Monetary Policy and Deglobalization May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 24
  • 25. Distribution Effects From Creditor to Debtor / From Private to Public • Via financial repression. From Enterprise Sector to Financial Sector • Via inflation of financial markets, repressing consumption. From Poor to Rich • Via asset price inflation, financial repression. From Young to Old • Via nominal wage repression, increasing real estate prices. From Small to Large Enterprises / Financial Institutions • Via capital market financing versus bank-based financing. From Periphery to Economic Centres • Via concentration effects of monetary policy. From Current Account Surplus to Deficit Countries • Via current account surpluses and TARGET2-balances. May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 25
  • 26. Japan: Nominal Wages and Employment May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 26 Quelle: 総務省, Japan: Ministry of Internal Affairs and Communication. 38 43 48 53 58 100 105 110 115 120 125 130 Q2 1980 Q2 1987 Q2 1994 Q2 2001 Q2 2008 Q2 2015 Millions Index (100=1980) Real wages Total employment (rhs)
  • 27. USA: Stock Prices and Income Inequality May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 27 Quelle: Thomson Reuters, Top Income Database. 10 12 14 16 18 20 22 24 0 20 40 60 80 100 120 140 160 180 1950 1960 1970 1980 1990 2000 2010 2020 Percent Index 2015=100 NYSE (l.h.s.) Top 1% Income Share, USA (r.h.s.)
  • 28. 5. Implications for E(M)U and Exit Options The Creeping Transformation of the Economic System • The monetary policy the ECB favours government expenditure and regulation, • which implies a gradual move away from market principles (liability) towards principles as they prevailed in the socialist planning economies. • The wealth position of growing parts of the population is deteriorating, distribution conflicts rise and political polarization occurs. Exit Strategies • Monetary stabilisation is the prerequisite for economic and political stabilisation. • A decisive gradual increase of interest rates would be an exit strategy based on the current monetary system (Paul Volcker). • Alternative monetary systems outside the reach of policy makers (Hayek 1976) are a new gold, or a bitcoin standard. May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 28
  • 29. Thank you very much for your attention! Twitter: @Gunther Schnabl May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 29
  • 30. Long-term Interest Rates in Germany and USA May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 30 Source: Thomsen Reuters. -2 0 2 4 6 8 10 12 14 16 1980 1985 1990 1995 2000 2005 2010 2015 2020 Percent United States Germany
  • 31. Real Estate Prices in a Dyfunctional Monetary Union May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 31 Source: OECD. 100 120 140 160 180 200 220 240 260 280 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Index (Q1 1999 = 100) Euroraum Spanien Deutschland
  • 32. The Upswing Explained May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 32 • Innovations in the real and financial sector or the discovery of new markets stimulate investment (from Iii1 to Iii2). • A credit boom is triggered when the additional capital demand of enterprises is satisfied at unchanged interest rates (ic1 = icb1 = ic2), which mimics an increase in savings (future consumption). • The credit expansion leads to increasing investment at unchanged interest rates. • The natural interest rate increases (from in1 to in2). • Idle capacities are used. Then, with higher investment, demand for labor and thereby wages increase. • Higher demand for consumer goods does not meet sufficient supply as capacities are bound in the investment goods sector. • As prices rise, higher profits are signaled, which triggers additional investment. • The perceived positive wealth effect of rising asset prices further stimulates consumption and asset purchases of the household sector, financed by low interest rates.
  • 33. 33 Turnaround and Downswing Explained May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy • Rising prices and declining real wages motivate more labor- intensive production reducing capital requirements per unit of consumption output. Overall investment declines (Ricardo effect). • Asset prices and consumer prices reach unsustainable limits. Credit is tightened by the banking sector, or the central bank raises its policy rate to fight inflation. • With the central bank and capital market interest rates rising to icb3=ic3, the threshold for the profitability of all previous and future investment projects is lifted. • Investment projects have to be dismantled (from Iii2 to Iii3) as a cumulative downward process sets in. The natural rate of interest declines to n3. • The crisis is aggravated as the central bank keeps the policy rate above the natural rate (icb3 > in3) and/or panic in financial markets makes banks reluctant to provide credit (ic3 > in3). • Bankruptcies and declining prices and wages are the basis for the recovery (cleansing effect, Schumpeter 1912).
  • 34. Concepts of Natural Interest Rates Böhm-Bawerk (1890) • The natural interest rate reflects the time preference of individuals. Wicksell (1898: 102) • “There is a certain rate of interest on loans which is neutral in respect to commodity prices, and tends neither to raise nor to lower them.” Hayek (1935) • “It is the rate that tells the truth about the availability of resources for meeting present and future consumer demands, allowing production plans to be kept in line with the preferred pattern of consumption.” Woodford (2003) • The natural level of output is defined as the steady state value of output (subject to stochastic shocks) under fully flexible prices and the natural rate of interest is the real rate that prevails if output is equal to its flexible price level. May 2022 Prof. Dr. Gunther Schnabl, Institute for Economic Policy 34