ECB Economic Policy Monetary Policy

“European Central Bank has to keep all its options open”

The ECB is keeping its course and following its expansionary monetary policy stance. There had been expectations in Germany that the ECB would promise to end its purchase program in September, but these have been disappointed. The ECB has to keep its options open. The recent turmoil in financial markets, the stronger euro and disappointingly weak inflation in the euro area don’t bode well for a swift end of the purchase program. Despite the change in forward guidance, I now … [continue reading]

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Economic Policy inequality

Is Germany Catching Trump’s Tax Disease?

The op-ed was first published on Project Syndicate on January 26, 2018.

After months of negotiations, another grand coalition government – comprising Chancellor Angela Merkel’s Christian Democratic Union (CDU) and a grudging Social Democratic Party (SPD) – is taking shape in Germany. But the new government seems likely to miss the opportunity afforded by Germany’s strong economic and financial situation to pursue much-needed reforms.

In fact, the fiscal policies that Germany’s emerging government is discussing bear a remarkable resemblance to

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Economic Policy inequality ZEIT ONLINE op-ed column

Opportunity Credit to Safeguard the Future

The social divide did not first become obvious with the election of Donald Trump and the rise of right-wing populist extremists in Europe. In light of social inequality and uncertainty, political polarization and the mounting struggle for a piece of the pie come as little surprise. Policy makers must react by fundamentally rethinking social policy with the aim of improving people’s economic, social, and political participation, thereby affording them new opportunities.

An opportunity credit would be an excellent approach. Based … [continue reading]

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Economic Policy inequality ZEIT ONLINE op-ed column

Unconditional basic income does not equal more freedom

This text was also published in German in ZEIT ONLINE on April 28 as part of the op-ed column “Fratzschers Verteilungsfragen“.

“Freedom for the wolves has often meant death to the sheep,” noted British philosopher Isaiah Berlin as a way of describing the conflicts in industrial society. Technological change and globalization have brought great freedom and opportunity to some people. Many others, however, feel threatened by these developments. They are worried about their jobs and fear an increasing dependence on … [continue reading]

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Business Cycles, Growth, Economic Structure Currency and Financial Markets ECB Economic Policy Europe Macroeconomics

Statement on the ECB council meeting (April 27, 2017)

It is wise for the ECB to stick to its policy strategy and not let itself be impressed by criticism from Germany. The pressure from Germany for the ECB to end its expansionary policy stance prematurely has increased. The ECB is right to resist the pressure from Germany as the economic and financial risks for the euro area are still significant.

The ECB is only gradually getting closer to meeting its price stability mandate as in particular core inflation is … [continue reading]

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Economic Policy inequality ZEIT ONLINE op-ed column

Equal opportunity, not basic income, for all

This text was also published in German in ZEIT ONLINE on April 14 as part of the op-ed column “Fratzschers Verteilungsfragen“.

Unconditional basic income has resurfaced as a subject of lively discussion. The Swiss rejected it last year, but other countries are already experimenting to find out what effects such basic income could produce.

It is being treated as a savior – some consider it a cure for social inequality and a means of modernizing the social system, while other … [continue reading]

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Economic Policy Election2017 Europe inequality ZEIT ONLINE op-ed column

Trump’s brand of populism feeds on frustration and fear

January 20, 2017 is a historic day, with Donald Trump’s entry into office as the 45th U.S. President marking the beginning of a new era. Yet his inauguration is accompanied, at least among certain political circles, by a widespread anticipation of his failure – as well as the belief that it’s only a matter of time until everyone else catches on.

The prospect of a Trump presidency is generating collective concern around the globe: since he was elected in … [continue reading]

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Business Cycles, Growth, Economic Structure Currency and Financial Markets ECB Economic Policy Europe Foreign Trade and International Economic Relations

Germany’s Misunderstood Trade Surplus

Now that Germany’s current-account surplus has reached a record €270 billion ($285 billion), or close to 8.7% of GDP, the ongoing debate about its economic model has intensified. Eurozone politicians and Donald Trump’s administration in the United States are each blaming the other for the economic imbalance; and all are blaming the euro.

Trump’s administration, for its part, has attacked Germany for exporting too much, and accused it of manipulating the euro. In fact, Germany’s trade surplus has little to … [continue reading]

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Economic Policy ZEIT ONLINE op-ed column

Germany’s equal pay laws stuck in the Stone Age

This text was first published in German in  ZEIT ONLINE on January 13,  as part of the op-ed column “Fratzschers Verteilungsfragen“.

Women themselves are to blame for the fact that they earn less, and any laws governing equal pay would pose an unnecessary economic burden – right? Wrong.

Over the past few months, a contentious debate in Germany has been flaring up regarding the new “wage equality law” designed to help eliminate gender-based discrimination. Critics of the law argue that … [continue reading]

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Currency and Financial Markets Economic Policy Monetary Policy ZEIT ONLINE op-ed column

Germany’s savings madness

This text was also published in German in  ZEIT ONLINE on February 17,  as part of the op-ed column “Fratzschers Verteilungsfragen“.

Germany is generating substantial export surpluses – but the profits are being squandered abroad. The solution? Investing in Germany.

Since the year 2000, every German has lost an average of €7,500 euros in savings abroad.

How could that be? Didn’t our country just post a record surplus, exporting significantly more to its foreign partners than it is importing? Yes, … [continue reading]

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