David Bell's picture
Affiliation: 
University of Stirling
Credentials: 
Professor of Economics

Voting history

Happiness and well-being as objectives of macro policy

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Question 1: Do you agree that subjective well-being measures, or at least some of the subindices from the typical survey measures, are now reliable enough to give useful insights when used in macroeconomic empirical analysis?

 
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Answer:
Agree
Confidence level:
Confident
Comment:
There does seem to be sufficient corroborative evidence to support this conclusion, though perhaps only weakly. Economic arguments still explain only a small proportion of the variance in subjective well-being. The metrics used to capture this concept are still fairly crude. They require further research, which is only likely to be fruitful if economists are prepared to engage with other disciplines, notably psychology.

A “new” UK industrial strategy ?

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Question 2: Do you agree that the UK needs a new regional policy?

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Answer:
Agree
Confidence level:
Not confident
Comment:
I am not confident that Enterprise Zones will add significantly to economic activity. Unless the policies are carefully designed, displacement effects may predominate. Regional Selective Assistance still exists in Scotland. An evaluation in 2008 of the scheme's operation over the period 2000 to 2004 estimated costs per job in the range £13,272 to £34,419 and a positive net present value. The UK government is also in the process of devolving significant tax powers to Scotland, Wales and Northern Ireland since 2016. It remains to be seen whether this form of regional policy which involves transferring fiscal risk to sub-national governments increases growth rates in these areas. Current research on the effects of fiscal decentralisation on growth does not provide strongly supportive evidence. Similar arguments may apply to the transfer of fiscal powers to the "Northern Powerhouse". The difficulty of establishing an appropriate counterfactual will make evaluation of these policy initiatives somewhat tricky.

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Question 1: Do you agree that the UK needs a new industrial policy?

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Answer:
Agree
Confidence level:
Confident
Comment:
Any new policy should avoid focusing on individual companies. There may be value in investment in skills, infrastructure and information flows aimed at improving the competitiveness of domestic value chains. I guess this fits into the Rodrik view of the determinants of growth.

The Future of Central Bank Independence

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Question 3: More generally, do you agree that it is desirable to maintain central bank independence? Again focus on the near future, say next 48 months.

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Answer:
Strongly agree
Confidence level:
Confident
Comment:
If we extrapolate from recent events and argue that politicians will pay less attention to evidence in forming future economic policy, then having an important part of the institutional framework remaining technocratic is likely to be welfare enhancing.

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Question 2: Do you agree that the traditional argument that less central bank independence leads to higher inflation will (still) be relevant over the next 48 months in Western economies?

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Answer:
Disagree
Confidence level:
Confident
Comment:
I don't expect it to be relevant because I do not expect a rapid rise in inflation, even if central-bank independence is eroded somewhat. The reason that I do not expect a significant rise in inflation over the next four years is because the output gap has been consistently and significantly underestimated in most of the world's largest economies.

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