I’m a bit confused (more than a bit, actually). I read Cochrane’s post and the linked ECB blogpost written by the president of the ECB. The latter is a bit disappointing to look at, partly for reasons Cochrane mentioned.[1]
But I don’t really understand what (if anything) the ECB has done to overstep its mandate. As far as I can tell, the linked writing is a blog post written by the president of the ECB. In so far as it reveals poor and biased thinking on an important policy matter, it’s disappointing. But “the ECB has a mandate to make decisions on the basis of [X]” does not mean “the ECB cannot or even should not express opinions about [Y, which is different from X]” or “the ECB should not lobby governments to provide specific forms of [in this case climate-focused] fiscal stimulus.”[2]
Are there specific actions that reveal the way the ECB’s thinking has changed its behavior?
It’s O’Sullivan’s law at play, really: any organization not explicitly designed to be right-wing will eventually trend left-wing over time. When you overlay on top of this the crank realignment and its associated degradation of left-of-center epistemology, I guess this is what you get.
A thoughtful reply. Just to fuel the discussion, here’s John Cochrane on ECB overstepping it’s mandate: https://www.grumpy-economist.com/p/central-bankers-can-be-too-independent
I’m a bit confused (more than a bit, actually). I read Cochrane’s post and the linked ECB blogpost written by the president of the ECB. The latter is a bit disappointing to look at, partly for reasons Cochrane mentioned.[1]
But I don’t really understand what (if anything) the ECB has done to overstep its mandate. As far as I can tell, the linked writing is a blog post written by the president of the ECB. In so far as it reveals poor and biased thinking on an important policy matter, it’s disappointing. But “the ECB has a mandate to make decisions on the basis of [X]” does not mean “the ECB cannot or even should not express opinions about [Y, which is different from X]” or “the ECB should not lobby governments to provide specific forms of [in this case climate-focused] fiscal stimulus.”[2]
Are there specific actions that reveal the way the ECB’s thinking has changed its behavior?
It’s O’Sullivan’s law at play, really: any organization not explicitly designed to be right-wing will eventually trend left-wing over time. When you overlay on top of this the crank realignment and its associated degradation of left-of-center epistemology, I guess this is what you get.
Perhaps as an illustrative example, the Federal Reserve also publishes research and opinion notes (and has for decades). Looking at some topics they’ve covered, I see foreign direct investment, analyses of China’s economic potential and output, the costs of compliance with legal barriers to trade in countries other than the US, etc.