Angus Armstrong's picture
Affiliation: 
National Institute of Economic and Social Research
Credentials: 
Director of Macroeconomic Research
Visiting Professor, Imperial College London

Voting history

Are academic economists ‘in touch’ with voters and politicians?

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Question 1: Do you agree that the economics profession needs an institutional change that promotes the ability to communicate more effectively with policy-makers and the public at large and to make clear when economists have a united view; and do you agree that we need to introduce leadership to help achieve this improvement through coordinated efforts?

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Answer:
Strongly disagree
Confidence level:
Confident
Comment:
I find the suggestion that an institution should marshall, communicate or even facilitate the communication of economists' views disturbing. Economists must be able to make their own views known and disagree which each other. This is not the issue. I find the views expressed in the preamble to the question troubling. Let me first declare that I spoke at many Brexit events in cities across the constituent nations of the UK. I agree that there was a real and serious problem with the BBC - there should be an investigation about whether they fulfilled their public role. However, even if every economist in the UK agreed on the loss of GDP and in income per household I doubt the outcome would have been any different. Why? Because a large share of the population simply have seen any benefit of globalisation and so do not believe any of the estimates. As it was said in a Newcastle town-hall style meeting (an area that voted 'remain') 'that's your bloody GDP not mine'. So how much academic research has been carried out on the distributional and regional consequences of EU membership and globalisation? A Brexit vote has been possible for some time. To my knowledged there has been little research on on the UK distributional and regional impact of trade and migration (a bit more here). In my view the issue is how we fund economics in this country and therefore what economists do, rather than the refrain that 'we didn't get our message across'.

Brexit: the potential of a financial catastrophe and long-term consequences for the UK financial sector

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Question 2: What is the probability that the UK experiences such a significant disruption to financial markets and asset prices following a vote for Brexit on 23 June?

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Answer:
11-30%
Confidence level:
Not confident
Comment:
Much will depend on responses. Will there be a leadership challenge and who would be the favourite? Will credit ratiing agencies downgrade the UK one or two notches; and what would be the implications for OTC derivative contracts and structured products which often include provisions about ratings of counterparties? My answer assumes that the UK authorities at least are well prepared and will respond accordingly to mitigate disturbance.

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Question 1: Do you agree that there would be substantial negative long-term consequences for the UK financial sector if the UK were to leave the EU?

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Answer:
Agree
Confidence level:
Very confident
Comment:
in the event of Brexit, I would expect both the EU and UK would work together to keep current arrangements in place. However, it is clear that the EU will be repsonsible for financial regulation within the EU (within the context of G20, FSB etc). The UK would have to comply with regulations which it would have only consultative role in shaping. This does not seem to be realistic with being a global financial centre or in terms of coherent governance arragements.

The future role of (un)conventional unconventional monetary policy

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Question 2:  Do you agree that central banks should operationalise the use of these alternative tools of unconventional monetary policy for use either in the near term, or in the future, as economic conditions warrant?

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Answer:
Strongly agree
Confidence level:
Confident
Comment:
From a risk management perspective it would be prudent to operationalise alternative tools at least for the near term. In fact, one could regard it as negligent if alternative tools were not operationalised given the extraordinary economic conditions and failures in forecasting. I would expect the pros and cons of variations of 'helicopter drops' to at least be being considered behind closed doors. Of course, to be consistent with my first answer it must be clear that this is only when extreme conditions warrant.

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Question 1: Do you agree that central banks should continue to use the unconventional tools of monetary policy deployed in response to the global financial crisis as part of monetary policy under normal economic conditions?

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Answer:
Disagree
Confidence level:
Confident
Comment:
Conventional monetary policy decisions benefit from being protected from political influence. Unconventional monetary policy is inextricably linked to fiscal policy through fiscal projections conditioned on interest rate expectations (derived from the yield curve which QE can influence) and fiscal transfers from interest earned above the APF loan rate. While there are parallels with conventional policy, the amounts involved are a different order of magnitude. In ordinary economic conditions the economy is fairly sensitive to short term rates due to the dependence on bank finance.

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