One Swallow Doesn’t Make A Summer

Today Eurostat announced that the Euro area’s inflation rate (as measured by the HICP) has reached two per cent in February (see press release here: http://ec.europa.eu/eurostat/documents/2995521/7895720/2-02032017-CP-EN.pdf/97184273-b9ae-46e6-99be-e50321ce5fa8). While seems finally some good news for the crisis-battered Euro area, it actually isn’t. Here’s why. Continue reading One Swallow Doesn’t Make A Summer

Helicopters are for real disasters

So, everybody and their grandmas are discussing something so absurdly wacko, that just a few years earlier, even mentioning it could very well cost you your professional reputation. But in times of QE and negative rates, the perception of “throwing money off a helicopter” is relatively less crazy. In absolute terms of course, it is still nuts. Continue reading Helicopters are for real disasters

Inflation is inflation is inflation. Or not?

New numbers of the consumer price index sparked again a debate about what monetary policy can do to fight off European deflation and thence the economic glum across the continent. In brief, in February the HICP fell by 0.2 percentage points an an annualised basis. Since the average HICP is the ECB’s preferred gauge for “inflation”, this would suggest further loosening of monetary policy – not to mention that monetary
policy is as loose as it never has been, and this for years. So you may have noticed that I have put the term inflation in quotes, since inflation is something else, but not (really) the change of the HICP. Continue reading Inflation is inflation is inflation. Or not?

Inflation ist nicht gleich Inflation

Die EZB wird am Montag (9.3.) mit ihrem QE-Programm beginnen, offiziell weil die Inflationsrate zu niedrig ist. Ich verstehe beim besten Willen nicht, wie ein QE-Programm einer Zentralbank mit niedrigen Inflationsraten oder Deflation begründet werden kann.

Dem liegt meines Erachtens ein Missverständnis über die Natur der Inflation zu Grunde. Genauer, über die Doppelnatur der Inflation. Continue reading Inflation ist nicht gleich Inflation

Kern und Peripherie

Interessant, wie gut die durchschnittliche Inflation in der Eurozone die Grenze abbildet zwischen Kern (Ex-DM-Zone) und Peripherie (ClubMed + Irland). Findet ihr nicht auch?

Annualisierte Inflationsraten nach Ländern der EWWU (Quelle: EZB)
Annualisierte Inflationsraten nach Ländern der EWWU (Quelle: EZB)

Dazu passt mein Artikel, dass der durchschnittliche HICP sowieso ein schlechtes Instrument zur Messung der Inflationsrate im Euroraum ist.

Warum Europa in der Krise steckt

Es ist erstaunlich simpel festzustellen, warum Europa seit beinahe fünf Jahren in der Krise steckt und partout nicht herauskommt. Das eigentliche Problem ist dabei aber kein ökonomisches, sondern ein politisches. Europa hat zwei Krisen, deren Lösung sich gegenseitig ausschließen. Doch es gibt Möglichkeiten dieses Paradoxon zu lösen – aber das wird niemandem gefallen.
Continue reading Warum Europa in der Krise steckt

Inflation measures and the ECB’s mandate

Regarding the not-so-subtle innuendo in one of my last blogs, I will write a little bit about how the ECB measures inflation and why this may be insufficient.

Inflation is the term economists use to describe an overall increase of prices. Of course, some prices rise more than other, while others fall. Statisticians came up with a trick and define a “basket” of goods that are frequently used. Then inflation is the change of the weighted average price of said basket. Normally, these baskets are updated every five years with new products to replace obsolete ones (think Blu-Rays instead of DVDs). There are other measures of inflation, that have certain advantages and disadvantages over a goods basket. But since the ECB measures inflation by means of a goods basket, let us stick to that measure.

Continue reading Inflation measures and the ECB’s mandate