MIT's Orphanides Finds ECB Constrained by Politics

The video discusses the European Central Bank's (ECB) approach to bond purchases, highlighting the decision to have national central banks buy bonds, which has led to increased yield spreads between countries like Germany and Italy. The ECB's mandate to maintain euro area inflation close to 2% is examined, with a focus on the challenges of achieving this target amidst political constraints and differing national economic conditions. The need for Germany to accept higher inflation rates to help the euro area meet its overall inflation goals is also discussed.

What is the key issue regarding the effectiveness of the ECB's bond purchases according to the speaker?

How does the speaker view the ECB's decision to instruct national central banks to buy their own bonds?

According to the speaker, what should the ECB's mandate focus on for the euro area as a whole?

What does the speaker suggest should be communicated to the German public regarding inflation?

What criticism does the speaker have regarding the ECB's handling of core inflation?