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Bank of Finland and SUERF joint conference on Monetary Policy Approaches: A Comparative Appraisal on Tue 19 Oct.

PROGRAM
Hours are CET (local time in Helsinki is CET+1/EEST)

11:00 Welcoming address
Esa Jokivuolle, Head of Research, Bank of Finland I SUERF
Jakob De Haan, SUERF President I Professor of Political Economy, University of Groningen

11:15 Opening remarks
Olli Rehn, Governor of the Bank of Finland

11:45 Session I: “(Un)conventional approaches”
Chair: Juha Kilponen, Head of Monetary Policy and Research, Bank of Finland

Central banks’ objectives, targets, and tools
Klaus Adam, Professor, University of Mannheim, CEPR, CESIfo

Monetary policy and financial stability
Oreste Tristani, Senior Adviser, ECB

Indebted demand and implications for monetary policy
Ludwig Straub, Professor, Harvard University

13:15 Lunch and Poster Session

During lunch break you may follow a Poster Session chaired by Esa Jokivuolle, Head of Research, Bank of Finland and SUERF

Poster Session: Analysing communication to infer policy-makers intentions and preferences

Paper 1: Reading between the Lines: Using Text Analysis to Estimate the Loss Function of the ECB
Maritta Paloviita, Markus Haavio, Pirkka Jalasjoki, Juha Kilponen and Ilona Vänni, Bank of Finland

Paper 2: Who Talks During Monetary Policy Quiet Periods, and Why? Evidence from the European Central Bank"s Governing Council
Phillipp Gnan, WU Vienna, Institute for Finance, Banking and Insurance
Kilian Rieder, Österreichische Nationalbank

14:15 Session II: “Central banks in a changing world”
Chair: Ernest Gnan, Head of Economic Analysis Division, OENB and SUERF

Central banks and climate change
Anna Breman, Deputy Governor, Sveriges Riksbank

Monetary policy and inequality
Fiorella De Fiore, Head of Monetary Policy, BIS

Policy interactions between monetary and fiscal policies
Leonardo Melosi, Senior Economist, Economic Advisor, Federal Reserve Bank of Chicago

15:45 Coffee break

16:00 Session III Panel: “Experiences from central banks’ strategy reviews”
Moderator: Tuomas Välimäki, Member of the Board, Bank of Finland

Philip Lane, Member of the Executive Board, ECB
Andrew Levin, Professor of Economics, Dartmouth College
Patricia C. Mosser, Director, Columbia University

17:15 End


Program Committee
Fabian Eser, Counsellor to the Executive Board, ECB and SUERF
Ernest Gnan, Head of Economic Analysis Division, OENB and SUERF
Esa Jokivuolle, Head of Research, Bank of Finland and SUERF
Juha Kilponen, Head of Monetary Policy and Research, Bank of Finland
Christian Upper, Head of Macroeconomic Analysis, Monetary and Economic Department, BIS and SUERF

Bank of Finland - SUERF Joint Conference | 1634633307

Welcome to the conference! We will start at 11:00 CET / 12:00 EEST. You may ask questions by writing them in this chat window. Write your comments in your own name. Only comments and questions presented by name will be included in the broadcast.

Bank of Finland - SUERF Joint Conference | 1634636147

The floor is open for questions. Write your comments in your own name. Only comments and questions presented by name will be included in the broadcast.

Piet Christiansen | 1634636234

With the markets also being driven by BoE/ Fed repricing, do you worry about markets not fully understanding your reaction function/ sequence of rate hike / APP net end.

Juhana Brotherus | 1634636686

What is your view on the market pricing, and that of survey measures such as SPF, that inflation will remain below of ECB's 2% inflation target in the medium to long-term? Are you satisfied with the current inflation expectations?

Piet Christiansen | 1634636898

Without going to much into details, but Rehn just said that markets 'quite well' understand the reaction function. Markets are now pointing to a first 10bp rate hike in Dec22. Is that realistic in his view?

Mikel Larreina | 1634637577

A question to Klaus Adam regarding his topic: Central banks’ objectives, targets, and tools


Do you think that the ECB's tools are still functioning properly in the current economic environment which shows signs of stagflation?

Mikel Larreina | 1634637685

Most young people think that central banks should play a more active role in solving social problems and are giving increasing importance to climate change.

Which is the best strategy to ensure the compliance of the Treaty's objectives in terms of climate change as well as the mandate for achieving price stability?

Mikel Larreina | 1634637772

Do you think that expansive monetary policies have increased inequality over the past decades? Is Wall Street profiting at the expense of Main Street?

Nektarios Michail | 1634638545

Is it possible to have the presentations?

The presentations will be published at the event page after the conference.

Ulf Söderström | 1634638615

Very interesting, Klaus! Presumably different sectors have different degrees of price stickiness, and then should get different weights in the optimal inflation rate. Do you take that into account?

Ernest Gnan | 1634638629

To Klaus: 1. at the start of your presentation you raised the issue of how to cope with the potential risk of financial dominance in an environment of rising inflation, when tightening the stance might trigger financial instability. Of course, financial stability side effects of monetary policy are also evident during expansionary phases. What is your recipe how to cope with this “side effect”, avoiding both financial crises and financial dominance?
2. On your proposal for the optimal inflation target: this can be endogenous, since price setting behavior and downward price rigidity may change in response to the experienced level of inflation. How would this affect your findings, both at the theoretical and empirical level?

Jacques Cailloux | 1634638763

Thks Adam for your presentation. I suppose your data set is price level data while the Eurostat HICP statistics include quality adjustment such as hedonic adjustment. Should this have an impact on your conclusion about the optimal level of inflation as published by Eurostat?

Engin Kara | 1634638899

This is a very interesting paper! My question is what makes the inflation measure the authors are proposing optimal? Does it minimize a loss function? In the multi-sector new Keynesian model, the loss function does not depend only on relative prices. It also depends on the output gap variability and inflation variability. So, I'm not sure focussing only on relative prices would give us an optimal inflation target...

Bank of Finland - SUERF Joint Conference | 1634640453

The floor is open for some quick questions. Please write your comments in your own name.

Mikael Juselius | 1634640469

Thanks for an interesting presentation! One comment: the division of labor between macro pru and MP also rests on the assumption that the different (macro pru) tools are effective. This may not always be the case. This can be an alternative motive for MP to take financial stability concerns into account in addition to spillovers. You allude to this possibility with the "gets into all cracks" argument. Did the report consider the effectiveness of different macro pru tools?

Klaus Masuch | 1634640501

Thanks a lot for the great presentation, Oreste. In terms of sequencing, would you agree with the view that in current situation with robust demand, inflation moving higher and rather high asset price levels etc., Macro-Pru should ideally move pre-emptively (and before monetary policy) to strengthen the resilience of the financial sector in view of the risks of possible increases in loan losses and asset price declines associated with higher future interest rates?

Tom | 1634640562

Given the EA-wide monetary policy mandate, the financial stability analysis will focus on EA-wide financial stability and not on national financial cycles or national specifities of financial stability? Will the analysis focus on banks, NBFI, financial markets or all of those?

Bank of Finland - SUERF Joint Conference | 1634642011

The floor is open for questions. Please write your comments in your own name.

Esa Jokivuolle | 1634642176

Thank you, Ludwig! Would you characterize the case here that there is a market failure (externality) that policy should aim to correct for?

Matti Viren | 1634642204

The "poor" may be not poor in the intertemporal sense and their marginal propensity to consume may not be that low ...

Klaus Masuch | 1634642433

Thanks for the excellent presentation, Ludwig. If r-star is c.p. falling with more expansionary monetary policies, would you agree that more monetary-fiscal co-ordination is needed (e.g. more fiscal redistribution benefitting high MPC households) to avoid that monetary policy is more often (or for longer) constraint by the lower bound.

Bank of Finland - SUERF Joint Conference | 1634643865

The floor is open for questions. Please write your comments in your own name.

Ernest | 1634644029

Is there comparable research for the US Fed? What does it yield? How would US results compare with yours for the Eurosystem? If there were differences, what might be explanations?

Bank of Finland - SUERF Joint Conference | 1634645563

The floor is open for questions. Please write your comments in your own name.

Ernest Gnan | 1634646887

Please feel free to post your questions to our speakers any time here in the chat - I will take them up after the three presentations. Thank you! Ernest

Esa V | 1634647456

Anna Breman noticed one severe problem on reporting e,g C02 numbers. Actually they are not measured at all and are just a Gold Mine for different Consultant Firms. Could Central Banks/BIS work in order to develop a database to be used by the whole industry in order to all companies get the necessary data for the sustainability reports. This would make it much easier to get reliable data for banks in our credit quality analysis of our counterparties.

Bank of Finland - SUERF Joint Conference | 1634648829

Please feel free to post your questions to all the three speakers any time here in the chat. The chair of the session will take them up after the presentation.

Bank of Finland - SUERF Joint Conference | 1634649862

The floor is open for questions. Please write your comments in your own name.

Klaus Masuch | 1634649878

To Leonardo M.: This is a great paper! In another paper (on the dire consequences of a lack of monetary-fiscal co-ordination) you suggest that inflation should generally be after bad shocks, e.g. adverse shocks which increase public debt (and lower in good times). Here you make a similar suggestion related to the ZLB. Do you think that central banks should include GENERALLY such countercyclical inflation in their strategies?

Klaus Masuch | 1634650580

To Fiorella: thanks a lot for the great talk. There is one channel via which higher inflation can LOWER inequality: it burdens creditors who hold long-term bonds/claims and it benefits (less wealthy) debtors, including all taxpayers who do not own much bonds. Did you take this channel into account?

Klaus Masuch | 1634651021

To Fiorella: You rightly stressed that policies need to be better targeted towards those hit hard and the vulnerable. Does this mean that CB balance sheet policies are ill suited from this perspective , as the poor and the workers normally do not have financial assets which the CB could buy (and workers' human wealth for good reasons is not traded in financial markets)?

Bank of Finland - SUERF Joint Conference | 1634651284

We'll now have a short coffee break and the program will continue at 16:00 CET / 17:00 EEST with a panel discussion chaired by Tuomas Välimäki, Member of the Board, Bank of Finland.

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We will start in a few minutes.

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Please feel free to post questions and comments to the panelists at any time. The chair of the session will take them up during the discussion.

Bank of Finland - SUERF Joint Conference | 1634656629

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Bank of Finland - SUERF Joint Conference | 1634656695

Thank you for participating! All the presentations and the recording of the conference will be published on the conference website within a few days. The conference webpage: https://www.suomenpankki.fi/en/research/seminars-and-conferences/conferences-and-workshops/2021/monetary-policy-approaches-a-comparative-appraisal/

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