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Daniela Gabor Profile picture
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25 Feb, 5 tweets, 2 min read
yesterday, Vera Songwe of UN's Economic Commission for Africa called for Biden Administration to support a G20 SDR reallocation to low-income African countries

ft.com/content/71c964…
in what surely is perfect timing, today Yellen seemed to say yes at the G20 - but the devil is, as usual, in the detail.

What do Biden Admin and UNECA mean exactly with 'liquidity support'?

This is official development support for 'a market re-entry access vehicle that lowers sovereign borrowing costs and brings in the private sector'

or, in less complex language, a vehicle to subsidise private bondholders and increase demand for African sovereign debt
it is a 2020 proposal cooked up by PIMCO and UNECA - a Liquidity and Stability Facility (LSF) that uses, you guessed, the repo instrument to extend repo loans on preferential terms to private investors

ft.com/content/c784b7…
as I show in a report out next week - the LSF could end up shrinking fiscal space for African sovereigns, and reinforce their dependency on Eurobonds.

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More from @DanielaGabor

Daniela Gabor Profile picture
26 Feb
.@MichaelEMann term soft denialism applies well for this type of greenwashing, and from the UN climate finance envoy!
climate wars & disinformation campaigns, Blackrock edition:

world largest carbon financier claims that eliminating dirty loans/bonds from portfolios = greenwashing.

that is, if you lend to fossil fuel companies, you are a climate warrior. If you dont, you're a greenwasher Image
and this is why we urgently need dirty finance regulation - you cannot trust private finance to come up with solutions to the climate crisis.
Read 4 tweets
Daniela Gabor Profile picture
26 Feb
fascinating speech, recognising between the lines the growing impotence of inflation targeting regimes.

if monetary tools weaker, you need fiscal policy.
Schnable makes strong case for monetary-fiscal coordination.

public sector 'insensitive to low policy rates', giving Euroarea a fiscally restrained stance that further weakened monetary policy

why? fear of market tensions and public debt sustainability. Image
she wont say coordination, but ' policy response to the pandemic is a remarkable showcase for the power of monetary and fiscal policy interaction to boost confidence'
Read 5 tweets
Daniela Gabor Profile picture
8 Feb
now that the S/B duo and other New Keynesians worry about pent-up demand, excess savings & inflation

I am reminded of similar debate, won by 'excess savings' crowd, with disastrous consequences in formerly planned economies.
it's 1989, the Berlin Wall is shaking, and IMF economists + theoreticians of centrally planned economies need to come up with a plan of what exactly transition macroeconomics should look like.
IMF and Disequilibrium School agreed: planned economies were 'chronic excess demand economies'

why? monetary overhang = the socialist worker couldnt spend her income because of chronic shortages and rationing.

pent up demand would explode into hyperinflation if left unchecked
Read 10 tweets
Daniela Gabor Profile picture
8 Feb
In my evidence to @LordsEconCom, I argued that QE has fiscal spillovers that are poorly theorised & understood.
Reliance on QE alone created a massive failure of fiscal-monetary governance in 2010.
Good to see @guardian editorial warn against repeating that mistake post-pandemia
Bank of England's Internal Evaluation Office noted that the Bank should understand better the monetary-fiscal linkages created by QE.
I would go further, and argue that this gap affects:
a) transparency of QE
b) effectiveness of QE
c) design of fiscal measures
d) unwind of QE
a) Is QE transparent?

NO, if transparency = communicating clearly and effectively reasoning behind quantitative targets

two reasons: no theoretical tools to arrive at precise number, and no explicit consideration of 'monetary-fiscal linkages'

why: ideology
Read 7 tweets
Daniela Gabor Profile picture
5 Feb
now for the exciting session on monetary populism on Hungary from Julia Kiraly, ex deputy governor of MNB (Hungary central bank):

my friends from the left and right, be careful!
oh, someone has read my work on Eastern European carry-trades. Image
Hungarian monetary populism: central banking subordinated to politics, that is divorced from economic thinking, but subservient to Orban oligarchs (!!!!!)
Read 5 tweets
Daniela Gabor Profile picture
5 Feb
chief economist of the Slovakian central bank in conversation with @BJMbraun:

'there is nothing progressive about dismantling central bank independence and subjecting it to the will of the people' #nextgencentralbanking
reminded me of famous Mervyn King quote:

'central banks are often accused of being obsessed with inflation. This is untrue. If they are obsessed with anything, it is with fiscal policy' Image
Luis Garicano (EP): if @Isabel_Schnabel arguments wins the day and @ecb corrects market mispricing of climate risk, what next?
should ECB correct housing market imperfections? social/poverty imperfections?
Read 5 tweets

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