Athanasios Orphanides (born 22 March 1962) is a Cypriot

economist An economist is a professional and practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...

who served as Governor of the Central Bank of Cyprus between 3 May 2007 to 2 May 2012 and as a member of the Governing Council of the

European Central Bank The European Central Bank (ECB) is the central component of the Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's Big Four (banking)#International ...

between 1 January 2008 and 2 May 2012. Prior to his appointment as governor, he served as senior adviser at the board of governors of the

Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...

in the US, where he started his professional career as an economist in 1999. While at the Federal Reserve he taught undergraduate and graduate courses in

macroeconomics Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output (econ ...

and monetary economics at

Georgetown University Georgetown University is a private university, private Jesuit research university in Washington, D.C., United States. Founded by Bishop John Carroll (archbishop of Baltimore), John Carroll in 1789, it is the oldest Catholic higher education, Ca ...

and

Johns Hopkins University The Johns Hopkins University (often abbreviated as Johns Hopkins, Hopkins, or JHU) is a private university, private research university in Baltimore, Maryland, United States. Founded in 1876 based on the European research institution model, J ...

. He holds undergraduate degrees in mathematics and economics as well as PhD in economics from the

Massachusetts Institute of Technology The Massachusetts Institute of Technology (MIT) is a Private university, private research university in Cambridge, Massachusetts, United States. Established in 1861, MIT has played a significant role in the development of many areas of moder ...

. On 29 April 2012 President Demetris Christofias announced that Panicos O. Demetriades would succeed Orphanides as governor of the Central Bank of Cyprus effective 3 May 2012. Orphanides is a professor at

MIT Sloan School of Management The MIT Sloan School of Management (branded as MIT Sloan) is the business school of the Massachusetts Institute of Technology, a private university in Cambridge, Massachusetts. MIT Sloan offers bachelor's, master's, and doctoral degree progra ...

. After his mandate as governor of the ECB, Orphanides has repeatedly criticized the ECB's reliance on private credit ratings agencies for accepting assets as eligible for the ECB's monetary refinancing operations. In a September 2020 study co-authored with Yvan Lengwiler for the European Parliament's Committee on Economic and Monetary Affairs, Orphanides provided suggestions for the ECB's monetary policy strategy review.

Research

A major theme of Orphanides' research on monetary economics has been the evaluation and design of monetary policy in real time. He argued that since the data available to policy makers at the time policy decisions are made are imperfect and subject to substantial revisions, the historical analysis of monetary policy decisions as well as the evaluation of alternative policy strategies must be based on the information available in real time (Orphanides, 2001, Orphanides, 2003). His work has documented significant problems arising from policy decisions drawing on unobservable concepts such as the

output gap The GDP gap or the output gap is the difference between actual GDP or actual output and potential GDP, in an attempt to identify the current economic position over the business cycle. The measure of output gap is largely used in macroeconomic p ...

. Orphanides has argued against output-gap-based policy rules, such as the

Taylor rule The Taylor rule is a monetary policy targeting rule. The rule was proposed in 1992 by American economist John B. Taylor for central banks to use to stabilize economic activity by appropriately setting short-term interest rates. The rule considers ...

, and in favour of non-activist policy rules drawing on

Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and ...

and

Knut Wicksell Johan Gustaf Knut Wicksell (December 20, 1851 – May 3, 1926) was a Swedish economist of the Stockholm school. He was professor at Uppsala University and Lund University. He made contributions to theories of population, value, capital and mon ...

. He has stressed that overemphasizing the output gap as reflected, for example, in the

or optimal control policy, is counterproductive for stabilizing the macroeconomy. He has also provided an explanation of the high inflation experience in the United States during the late 1960s and 1970s as resulting from policy focused too closely at stabilizing the real economy, by aiming to close the perceived output and unemployment gaps. According to this analysis, the high inflation resulted from the fact these gaps were badly mismeasured due to overoptimistic real time estimates of potential output and the natural rate of unemployment (Orphanides, 2003). In related work, Orphanides and Simon van Norden, have explained that the unreliability of output gap measures in real time is of a more general nature than previously thought. They documented the unreliability of various statistical techniques for measuring the

in real-time and also the lack of predictive power of real-time

estimates for forecasting inflation, thus calling into question policy approaches that rely on the output for stabilization policy (Orphanides and Norden, 2002). The role of imperfect knowledge and the formation of expectations in a learning environment has been a theme in the work by Orphanides and John C. Williams. They have argued that the central bank must ensure that inflation expectations must remain well-anchored, in line with the central bank's price stability objective, in order to improve the stability of the macroeconomy. Their work documented the benefits associated with a central bank's numerical price stability objective and the pitfalls of optimal control policy design (Orphanides and Williams, 2008). Working with Volker Wieland and others, Orphanides also contributed to research on the conduct of monetary policy near to zero lower bound for nominal interest rates. This work was motivated by the Japanese experience with near-zero rates in the late 1990s but became of immediate policy relevance during the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

(Orphanides and Wieland, 2000).Orphanides, Athanasios and Volker Wieland (2000)
"Efficient monetary policy design near price stability"
, Journal of the Japanese and International Economies, 14, 2000, pp. 327–365

Footnotes

External links

Orphanides' homepage
{{DEFAULTSORT:Orphanides, Athanasios Monetary economists Macroeconomists Cypriot academics Cypriot economists 1962 births Living people Governors of the Central Bank of Cyprus Massachusetts Institute of Technology School of Science alumni Georgetown University faculty Johns Hopkins University faculty Czech emigrants to Cyprus Czech people of Cypriot descent Czech people of Greek descent MIT School of Humanities, Arts, and Social Sciences alumni Central bankers