# Athanasios Orphanides

Athanasios Orphanides (born 22 March 1962) is a Cypriot economist 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 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 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 and monetary economics at Georgetown University and Johns Hopkins University.
He holds undergraduate degrees in mathematics and economics as well as PhD in economics from the Massachusetts Institute of Technology.
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 atMIT Sloan School of Management.
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. Orphanides has argued against output-gap-based policy rules, such as the Taylor rule, and in favour of non-activist policy rules drawing on Milton Friedman and Knut Wicksell. He has stressed that overemphasizing the output gap as reflected, for example, in the Taylor rule 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 output gap in real-time and also the lack of predictive power of real-time output gap 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 global financial crisis (Orphanides and Wieland, 2000).

## Footnotes

* ↑ "FACTBOX-ECB Governing Council: Who's Who?". Reuters. 2 January 2009. Retrieved 15 August 2011.
* ↑ "centralbank.gov.cy". Archived from the original on 28 June 2011. Retrieved 4 April 2012.
* 1 2 3 "Athanasios Orphanides Biographical Note". Central Bank of Cyprus official web page. Archived from the original on 28 June 2011.
* ↑ Pantelides, Poly (29 April 2012). "Central Bank Governor officially named". cyprus-mail. Archived from the original on 2 May 2012. Retrieved 29 April 2012. PRESIDENT Demetris Christofias yesterday appointed academic Panicos Demetriades as Cyprus' central bank governor and European Central Bank Governing Council member, succeeding Athanasios Orphanides. ... His five-year term starts on 3 May, a day after Orphanides' term expires.
* ↑ "Athanasios Orphanides". 20 October 2023.
* ↑ Gabi Thesing (31 July 2012). "Draghi Reshapes ECB Crisis Pragmatism as Trichet's Dogma Fades". Bloomberg. Retrieved 9 August 2012. said Orphanides, who will start teaching at the MIT Sloan School of Management in September.
* ↑ Options for the ECB’s Monetary Policy Strategy Review europarl.europa.eu
* ↑ Orphanides, Athanasios (9 March 2018). "Monetary policy and fiscal discipline: How the ECB planted the seeds of the euro area crisis". VoxEU.org. Retrieved 7 December 2020.
* ↑ Orphanides, Athanasios (20 November 2017). "ECB Monetary Policy and Euro Area Governance: Collateral Eligibility Criteria for Sovereign Debt". Rochester, NY. doi:10.2139/ssrn.3076184. S2CID 158703172. SSRN 3076184. {{cite journal}}: Cite journal requires |journal= (help)
* ↑ Lengwiler, Y. and Orphanides, A., Options for the ECB’s Monetary Policy Strategy Review, Study for the Committee on Economic and Monetary Affairs, Policy Department for Economic, Scientific and Quality of Life Policies, European Parliament, Luxembourg, 2020.
* ↑ Orphanides Athanasios (2001) 'Monetary policy rules based on real-time data', "American Economic Review", 91(4), September 2001, pp. 964–985
* ↑ Orphanides, Athanasios (2003) 'The quest for prosperity without inflation' "Journal of Monetary Economics", 50(3), April 2003, pp. 633–663
* ↑ Orphanides, Athanasios and Simon van Norden (2002) '"The unreliability of output gap estimates in real time"', Review of Economics and Statistics, 84(4), November 2002, pp. 569–583
* ↑ Orphanides, Athanasios and John C. Williams (2008) '"Learning, expectations formation, and the pitfalls of optimal control monetary policy"', Journal of Monetary Economics, 55, Supplement 1, October 2008, pp. S80–S96
* ↑ 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