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Romanos Priftis

Economics

Division

Forecasting and Policy Modelling

Current Position

Senior Economist

Fields of interest

Macroeconomics and Monetary Economics,Financial Economics,Mathematical and Quantitative Methods

Email

romanos.priftis@ecb.europa.eu

Other current responsibilities
2024-

Secretary, Working Group on Econometric Modelling (WGEM)

Education
2010-2015

PhD in Economics, European University Institute, Italy

2010-2011

MRes in Economics, European University Institute, Italy

2008-2010

MPA in Public and Economic Policy, London School of Economics, United Kingdom

2005-2008

BSc in Economics and Econometrics, University of Nottingham, United Kingdom

Professional experience
2021-

Senior Economist, Forecasting and Policy Modelling Division, Directorate General Economics, European Central Bank

2020-2022

Principal Researcher, Projection Division, Department of Canadian Economic Analysis, Bank of Canada

2017-2020

Senior Economist, Projection Division, Department of Canadian Economic Analysis, Bank of Canada

2014-2017

Economic Analyst, Macroeconomic Modelling Division, Directorate General for Economic and Financial Affairs, European Commission

Awards
2010

Doctoral Scholarship from the Greek Scholarship Foundation (I.K.Y.)

Teaching experience
2013

PhD Macroeconomics and Monetary Economics, European University Institute

29 July 2024
WORKING PAPER SERIES - No. 2961
Details
Abstract
This paper introduces a New Keynesian multi-sector industry model that integrates firm heterogeneity, entry, and exit dynamics, while considering energy production from both fossil fuels and renewables. We investigate the effects of a sustained increase in fossil fuel prices on sectoral size, labor productivity, and inflation. A hike in the price of fossil resources results in higher energy prices. Due to ex-ante heterogeneity in energy intensity in production, the profitability of sectors is impacted asymmetrically.As production costs rise, less efficient firms leave the market, while new entrants must display higher idiosyncratic productivity. While this process enhances average labor productivity, it also results in a lasting decrease in the entry of new firms. A central bank with a strong anti-inflationary stance can circumvent the energy price increase and mitigate its inflationary effects by curbing rising production costs. This policy entails a higher impact cost in terms of output and lower average productivity, but leads to a faster recovery in business dynamism. Thus, our results suggest that monetary policy faces a trade-off between stabilizing aggregate activity and business dynamism.
JEL Code
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
L16 : Industrial Organization→Market Structure, Firm Strategy, and Market Performance→Industrial Organization and Macroeconomics: Industrial Structure and Structural Change, Industrial Price Indices
O33 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→Technological Change: Choices and Consequences, Diffusion Processes
Q43 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Energy→Energy and the Macroeconomy
24 July 2024
WORKING PAPER SERIES - No. 2957
Details
Abstract
We document novel survey-based facts about preferred long-run inflation rates among US consumers. Consumers on average prefer a 0.20% annual inflation rate, well below the Federal Reserve’s 2% target. Inflation preferences not only correlate with demographic and socioeconomic characteristics, but also with economic reasoning. A randomized control trial reveals that two narratives based on economic models—describing how inflation lowers the real value of wages and money holdings—affect inflation preferences. While our results can inform the design of central bank communication on inflation targets, they also raise questions about the alignment between such targets and consumer preferences.
JEL Code
C83 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→Survey Methods, Sampling Methods
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
26 April 2024
WORKING PAPER SERIES - No. 2935
Details
Abstract
We evaluate how the euro area economy would have performed since mid-2021 under alternative monetary policy strategies. We use the ECB’s workhorse estimated DSGE model and contrast actual policy conduct against alternative strategies which differ in their ”lower-for-longer” commitment as well as policymaker preferences regarding inflation and output volatility. Assuming that the monetary authority had full knowledge of prevailing conditions from mid-2021 onwards, the alternative policy strategies would call for anticipated timing of the start of the hiking cycle: earlier tightening would prevent inflation from peaking at 10%, but the forceful tightening since 2022:Q3 prevented higher inflation from becoming entrenched. However, once evaluating monetary policy on real-time quarterly vintages of incoming data and projections, the alternative interest rate paths would be broadly consistent with the observed policy conduct. The proximity of some benchmark optimal policy counterfactuals with the baseline, brings further indication that the actual policy conduct succeeded in implementing an efficient management of the output-inflation trade-off.
JEL Code
C53 : Mathematical and Quantitative Methods→Econometric Modeling→Forecasting and Prediction Methods, Simulation Methods
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
15 March 2024
OCCASIONAL PAPER SERIES - No. 344
Details
Abstract
This paper takes stock of the ECB’s macroeconometric modelling strategy by focusing on the models and applications used in the Forecasting and Policy Modelling Division. We focus on the guiding principles underpinning the current portfolio of the main macroeconomic models and illustrate how they can in principle be used for economic forecasting, scenario and risk analyses. We also discuss the modelling agenda which is currently under development, focusing notably on heterogeneity, machine learning, expectation formation and climate change. The paper makes it clear that the large macroeconometric models typically developed in central banks remain stylised descriptions of our modern economies and can fail to predict or assess the nature of economic events (especially when big crises arise). But even in highly uncertain economic conditions, they can still provide a meaningful contribution to policy preparation. We conclude the paper with a roadmap which will allow the ECB and the Eurosystem to exploit technological advances and cooperation across institutions as a useful means of ensuring that the modelling framework is not only resilient to disruptive events but also innovative.
JEL Code
C30 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→General
C53 : Mathematical and Quantitative Methods→Econometric Modeling→Forecasting and Prediction Methods, Simulation Methods
C54 : Mathematical and Quantitative Methods→Econometric Modeling→Quantitative Policy Modeling
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
8 February 2024
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 1, 2024
Details
Abstract
Emission reduction measures have been adopted at both country and European Union (EU) levels. This box assesses the impact on euro area real GDP and inflation of green fiscal discretionary measures as included in the December 2023 Eurosystem staff macroeconomic projections. Since these measures are unlikely to be sufficient to fully achieve the EU targets for emission reduction, energy efficiency and renewable energy production, model simulations are used to illustrate the medium-term impact of alternative transition policy scenarios. These simulations suggest modest downside risks to GDP and upside risks to inflation from transition policies to achieve EU targets, but the effects depend on the transition policy mix.
JEL Code
E3 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
Q48 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Energy→Government Policy
17 May 2023
WORKING PAPER SERIES - No. 2819
Details
Abstract
We use scenario analysis to assess the macroeconomic effects of carbon transition policies aimed at mitigating climate change. To this end, we employ a version of the ECB’s New Area-Wide Model (NAWM) augmented with a framework of disaggregated energy production and use, which distinguishes between “dirty” and “clean” energy. Our central transition scenario is that of a permanent increase in carbon taxes, which are levied as a surcharge on the price of dirty energy. Our findings suggest that increasing euro area carbon taxes to an interim target level consistent with the transition to a net-zero economy entails a transitory rise in inflation and a lasting, albeit moderate decline in GDP. We show that the short and medium-term effects depend on the monetary policy reaction, on the path of the carbon tax increase and on its credibility, while expanding clean energy supply is key for containing the decline in GDP. Undesirable distributional effects can be addressed by redistributing the fiscal revenues from the carbon tax increase to low-income households.
JEL Code
C54 : Mathematical and Quantitative Methods→Econometric Modeling→Quantitative Policy Modeling
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H23 : Public Economics→Taxation, Subsidies, and Revenue→Externalities, Redistributive Effects, Environmental Taxes and Subsidies
Q43 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Energy→Energy and the Macroeconomy
26 November 2018
WORKING PAPER SERIES - No. 2209
Details
Abstract
This paper finds that debt-financed fiscal multipliers vary depending on the location of the debt buyer. In a sample of 33 countries fiscal multipliers are larger when government purchases are financed by issuing debt to foreign investors (non-residents), compared to when they are financed by issuing debt to home investors (residents). In a theoretical model, the location of the government creditor produces these differential responses through the extent that private investment is crowded out. International capital mobility of the resident private sector decreases the difference between the two types of financing both in the model and in the data.
JEL Code
F41 : International Economics→Macroeconomic Aspects of International Trade and Finance→Open Economy Macroeconomics
H3 : Public Economics→Fiscal Policies and Behavior of Economic Agents
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
2024
European Economic Review
  • Günter Coenen, Matija Lozej and Romanos Priftis
2023
European Economic Review
  • Serdar Kabaca, Renske Maas, Kostas Mavromatis and Romanos Priftis
2023
SUERF Policy Brief No. 633
  • Günter Coenen, Matija Lozej and Romanos Priftis
2021
The Economic Journal
  • Romanos Priftis and Srecko Zimic
2021
Staff Discussion Paper 2021-4, Bank of Canada
  • Wei Dong, Geoffrey Dunbar, Christian Friedrich, Dmitry Matveev, Romanos Priftis and Lin Shao
2020
Journal of Banking & Finance
  • Stefan Hohberger, Romanos Priftis and Lukas Vogel
2020
Staff Discussion Paper 2020-16, Bank of Canada
  • Grahame Johnson, Sharon Kozicki, Romanos Priftis, Lena Suchanek, Jonathan Witmer, and Jing Yang
2019
Empirical Economics
  • Romanos Priftis and Anastasia Theofilakou
2019
Journal of Economic Dynamics and Control
  • Stefan Hohberger, Romanos Priftis and Lukas Vogel
2018
Journal of Economic Dynamics and Control
  • Hafedh Bouakez, Rigas Oikonomou and Romanos Priftis
2018
Discussion Paper 76, Directorate General for Economic and Financial Affairs, European Commission
  • Romanos Priftis and Anastasia Theofilakou
2018
Discussion Paper 77, Directorate General for Economic and Financial Affairs, European Commission
  • Francisco de Castro Fernández, Marion Perelle and Romanos Priftis
2017
Discussion Paper 43, Directorate General for Economic and Financial Affairs, European Commission
  • Daniel Monteiro and Romanos Priftis
2017
Open Economies Review
  • Romanos Priftis and Lukas Vogel
2016
The Manchester School
  • Romanos Priftis and Lukas Vogel
2016
Institutional Paper 25, Directorate General for Economic and Financial Affairs, European Commission
  • Romanos Priftis
2016
Quarterly Report on the Euro Area, Directorate General for Economic and Financial Affairs, European Commission
  • Romanos Priftis