Akos Valentinyi's picture
Affiliation: 
University of Manchester

Voting history

Market Turbulence and Growth Prospects

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Question 1: Do you agree that economic growth prospects for the global economy have seriously deteriorated?

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Answer:
Disagree
Confidence level:
Confident

China’s growth slowdown: likely persistence and effects

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Question 2:

Do you agree that if the Chinese slowdown turns out to be persistent, it will have a significant impact on UK growth (say, in the order of a few tenths of a percentage point) and/or it will justify a material change in monetary policy (for example, in terms of the timing and speed of a return to ‘normal’ interest rates) and fiscal policy (for example, in terms of the timing and speed of fiscal contraction).

Answer:
Agree
Confidence level:
Confident
Comment:
If the world’s second largest economy slows down, it bound to have an effect on UK economic growth. However, much of this effect depend on how the slowdown comes about. If it happens slowly over time (no hard landing), then the impact may well be very small which does not require material change of UK monetary and fiscal policy. However, if there is hard landing for China, then it is more likely that economic policy in the UK has to react to it.

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Question 1:

Do you agree that the Chinese economy is likely (say more than 50% probability) to maintain in the medium term (say, for at least ten years) a rate of annual growth exceeding 6%.

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Answer:
Disagree
Confidence level:
Very confident
Comment:
In 2014 China's per capita GDP was about 25% of that of the USA. If China's GDP grew 8% per year, and USA's GDP grew 3% per year over the decade, then taking into account the projected population growth rates (0.5% for China, and 0.7% for the US), China's per capita GDP in 2024 would be 41% of USA's per capita GDP (37% if China grew 7%). It would be unusual for a country to catch up to such an extent to rich countries without experiencing any slowing down of its GDP growth. It is not unheard of, but it is rare. It is more likely that in the next few years China's growth will exceed 6% but it slowly falls below it during the second half of the decade.

ECB's quantitative easing

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Question 2:

Do you agree that the structure of the ECB's QE programme makes the Eurozone more fragile and increases the risk of one country leaving the euro?

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Answer:
Strongly Disagree
Confidence level:
Extremely confident
Comment:
The structure of the ECB's QE programme does not make the Eurozone more or less fragile. The lack of fiscal union makes the Eurozone more fragile. And the structre of the ECB's QE programme is a simple reflection of that.

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Question 1:

Do you agree that the design of the ECB's QE programme reduces its effectiveness? 

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Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
Generally monetary conditions are determined by the liabilities side of the central bank. Hence the risk sharing arrangement has little impact on the effectiveness of QE. The effect of more or less risk sharing on the cost of market funding is unclear. Less risk sharing may increase the funding cost if national governments behave the same way in the presence of more and less risk sharing. However, if more risk sharing leads to moral hazard, then the effect of risk sharing on funding cost is most unclear.

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