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Bartholomew, Diggle

Articles by Bartholomew, Diggle

The lasting impact of the Covid crisis on economic potential

September 21, 2021

As the global economy recovers from the immediate economic impact of the Covid crisis, attention is increasingly turning to the long-run impact of the shock on the productive potential of the economy. Such assessments are crucial in various looming policy choices. The UK government’s fiscal plans, for example, rest on the Office for Budget Responsibility’s assessment that the UK’s economic outlook will remain 3% below its pre-crisis trend into the long run (OBR 2021). And as the US Federal Reserve and other central banks begin to remove policy support, estimates of potential output and the output gap will be central to the assessment of inflation pressures.
While there is a growing literature studying the lasting impact that cyclical shocks can have on the supply side of the

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Climate change and central banks: The case for violating neutrality

August 12, 2021

Climate change is a defining challenge for politicians, policymakers, and financial markets, and it is beholden on each of those to think deeply about the role they can play in limiting the global temperature rise. As the ECB’s strategic review amply demonstrates, central banks are among those institutions increasingly considering their role in meeting climate objectives (ECB 2021).
But central banks are unelected, technocratic institutions, operating within strict legal frameworks whose primary task is typically price stability. Any involvement in climate policy must therefore have a sound basis, grounded in the mandate handed to them by elected politicians (Tucker 2019).
Motivating central bank action on climate change within existing mandates
Therefore, one justification

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