Ashoka Mody on "The ECB: Behind the Curve"
Ashoka Mody is the Charles and Marie Robertson Visiting Professor in International Economic Policy and Lecturer in Public and International Affairs at Princeton University. He has extensive experience with economic policy both at the World Bank and the International Monetary Fund, and on December 9th he discussed his most recent paper, “The European Central Bank: Building a Shelter in a Storm” (co-authored with Dae Woong Kang and Nick Ligthart).
Mody presented a comparative analysis of U.S. Federal Reserve and ECB interest rate policies during the aftermath of the 2008 financial crisis. The focus of the paper and presentation is the ECB’s failure to quickly lower interest rates, thereby undermining its long-term credibility. While the Fed tried to "build a shelter before the storm," says Mody, the ECB waited until the storm was already raging and could not gain traction as its credibility was already diminished.