Costas Milas's picture
Affiliation: 
University of Liverpool
Credentials: 
Professor of Economics

Voting history

Autumn Statement & Charter for Budgetary Responsibility

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Question 1: The Chancellor forecasts a cyclically adjusted fiscal surplus by 2017-18 and in cash terms by 2019-20. Do you agree that this planned path of fiscal consolidation is appropriate?

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Answer:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
The Chancellor has not considered the possibility of a Brexit which might worsen the fiscal and economic outlook. If the British electorate vote in favour of Brexit, we will witness huge investor uncertainty and as a result, a (much) higher rate of return investors demand to be compensated for the greater risk they are willing to take in order to hold UK debt. This higher yield will add to the cost of borrowing that companies face and will delay their investment decisions. All these will worsen the fiscal and economic outlook in the short- to medium term. Perhaps we should sort these issues out before making forecasts for...2019-20.

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:
Strongly Agree
Confidence level:
Confident
Comment:
This is indeed possible. China’s growth does not have a big direct impact on our economic prospects. Indeed, ONS data show that, in 2014, UK exports to China accounted only for 4.8% of total exports. However, there are significant indirect effects which should not be underestimated. Indeed, according to the IMF (http://blog-imfdirect.imf.org/2014/03/26/china-size-matters/), China’s share of global GDP increased from 2% in 1995 to 15% in 2013 (the US still accounts for 19% of global GDP).

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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:
Confident

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:
Disagree
Confidence level:
Confident
Comment:
I would not say so. Although not officially stated, limited risk sharing is probably related to the fact that some Eurozone countries are much further behind than others in terms of structural reforms. This lack of structural reforms undermines economic growth, adds to sustainability issues and indeed makes Eurozone more fragile. I would imagine that progress in terms of structural reforms would (at some stage) take out of the picture limited risk sharing but Eurozone’s leaders need to become explicit about this. Take for example Greece. Greece’s need for structural reform is captured by World Bank’s government effectiveness index. The index, which captures perceptions of the quality of the civil service and the degree of its independence from political pressures, reveals the extent of the problem. Among 215 countries, the index currently ranks Greece at the disappointing 67th percentile. Both Portugal and Spain, Eurozone’s other peripheral countries who have gone through similar financial experiences to Greece, are ranked above the 83rd percentile whereas Germany is ranked at the 90th percentile.

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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:
Disagree
Confidence level:
Not confident

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