Christopher Martin's picture
Affiliation: 
University of Bath
Credentials: 
Professor of economics

Voting history

Euro Area Deflation and Risk for UK Economy May 2014

Question 1

Do you agree that there is a significant risk of a sustained deflation across the Euro Area in the coming two years?

Answer:
Agree
Confidence level:
Confident
Comment:
I expect mild deflation in the Eurozone over the next year or so. Eurozone inflation has fallen more-or-less continuously since early 2012 and has been below 1% for the past 6 months, All the main components of the price index are growing at less than 1%, with service sector inflation of just 0.1% at the end of 2013. Prices are falling in most periphery countries, including Spain, and inflation does not exceed 1% in any member country. Wages are if anything, rising more slowly than prices. Even a mild continuation of thee trends implies deflation. The only indicator suggesting otherwise is unit labour costs, which have risen slightly. But I expect deflation to be mild, for two reasons. First, I expect the forces that act against deflation, especially resistance of workers to falling nominal wages, to be stronger in the Eurozone than elsewhere. Second, I expect a strong (for them) response from the ECB, probably through a form of QE, which will at first offset and then reverse deflation. Evidence from the US and UK suggests that QE can be an effective remedy for deflation.

Prospects for Economic Growth in the UK April 2014

Question 2

Do you agree that, in the wake of the financial crisis, any downward adjustment to the expected average annual long-term growth rate of the UK economy is likely to be by less than 0.25 percentage points?

Answer:
Disagree
Confidence level:
Not confident
Comment:
Anyone who has confidence in this is exhibiting hubris rather than knowledge We have a lot of evidence to say that financial crises are very damaging for an economy in the short-medium run. There is some evidence that they are damaging in the long-run as well; there is no evidence I know of that suggests they are beneficial in the long-run. More than that we cannot say

Question 1

The long period of slow or negative growth might imply that there is a substantial output gap in the UK economy.  Do you agree that there is currently a larger output gap than the OBR estimate to the extent that the shortfall in output relative to capacity is 3% or greater?  

Answer:
Agree
Confidence level:
Not confident at all
Comment:
In "normal" times the output gap is hard to measure as the equilibrium level of output depends on a range of unobserved variables. These are not (yet) normal times, so the gap is even more uncertain. My suspicion that the output gap is larger than the OBR thinks is only based on the observation that inflationary pressures remain low

Responsible long-term fiscal policy (pilot survey)

Second question:

To help ensure that advanced country governments pursue responsible fiscal policies, countries should adopt formal rules for limiting structural deficits, which are supported by primary legislation or constitutional reform.

Answer:
Disagree
Confidence level:
Very confident
Comment:
Fiscal policy is not an appropriate tool for stabilisation. The "structural" component of a deficit is not useful in practice

First question:

To help ensure that advanced country governments have sufficient flexibility to respond to future crises, it is important that finance ministries aim for a ratio of public debt to GDP that is substantially less than 60% in normal times.

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
Any stable ratio less than 100% wold be fine

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