ASI Paper “The Real Problem was Nominal” is quoted in The Daily Telegraph

The ASI’s paper “The Real Problem was Nominal” was quoted in The Daily Telegraph.

Some experts have already warned that the ECB is not doing enough. Scott Sumner, a leading monetary economist, said that “European officials have not learned any of the lessons offered by the Japanese experience” of prolonged economic stagnation.

“The [QE] policy would have been far more effective if done a year or two ago,” he wrote in a paper published by the Adam Smith Institute.

Read the full article here.

The Real Problem was Nominal” - written by Prof Scott Sumner, a leading economist who was a key inspiration for the Federal Reserve’s QE3 programme - explains how the European Central Bank  is repeating the mistakes that the Fed and Bank of England made in the 2008 crisis—trying to plan credit and micromanage the financial sector, when the real issue is excessively tight monetary policy.

The paper argues that Eurozone quantitative easing will not reverse the Eurozone’s decline unless it is open-ended and tied more explicitly to the ECB’s inflation target. Targeting nominal GDP—the total amount of spending in the economy, also known as aggregate demand—would be even better, the paper argues, guaranteeing more stability when unexpected supply-side shocks like oil price movements make inflation targeting trickier.

Download “The Real Problem was Nominal” for free here.

Ben Southwood discusses incentives to curb obesity on BBC World News

Head of Research at the Adam Smith Institute, Ben Southwood, spoke to BBC World News about Mexico City’s new scheme to incentivise people to exercise by subsidising their travel service; he also argued that the proposals in the UK to curb obesity are too intrusive into individual’s lives.


Ben Southwood’s comments on the CPI drop to 0.3% feature in This is Money

Head of Research at the Adam Smith Institute, Ben Southwood, was quoted by This is Money on the benefits of inflation dropping down to 0.3%

Head of Research at the Adam Smith Institute, Ben Southwood, said: ‘There is good disinflation – cheaper inputs and improved productivity – and bad deflation – weak demand – and what we’re experiencing now seems to be the good kind.’

And added: ‘It is vital for monetary stability and neutrality that the Bank keeps its policy predictable, but right now policy is roughly where it should be.’

Read the full article here.