David Cobham's picture
Affiliation: 
Heriot Watt University
Credentials: 
Professor of economics

Voting history

Global risks from rising debt and asset prices

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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?

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Answer:
Agree
Confidence level:
Confident
Comment:
It has clearly played a role – but the question to ask is why monetary policy has had to act in this way, and the answer is obvious: the refusal of governments (notably Schäuble's!) to use fiscal policy in an appropriate manner, which has been based on a range of incorrect arguments for austerity (expansionary fiscal contractions, debt ratio threshold effects on growth, moral hazard poorly understood, etc). If fiscal policy had been used in the right way since 2009 there would have been less pressure on central banks to undertake monetary expansion (and to invent new techniques for it), economic activity would have been stronger and the debt/asset price position would have been healthier.

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Question 1: Does the world economy face heightened risks arising from an excess of public and private debt and/or inflated asset prices?

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Answer:
Agree
Confidence level:
Confident
Comment:
Yes - but there are other risks too, and it's not obvious that this one dominates – certainly not enough to require immediate or severe monetary tightening.

Juncker's State of the Union Address

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Question 2: Do you agree that the euro has had more benefits than costs?

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Answer:
Agree
Confidence level:
Confident
Comment:
There have been and are significant benefits - better monetary policy for many countries, lower transactions costs, a more stable external exchange rate, etc - but the way the Eurozone has been operated has also imposed significant costs, notably since 2010-11. However, it should be possible to eliminate those costs without losing the benefits.

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Question 1; Do you agree that euro membership should be compulsory for all EU member states?

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Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
Universal euro membership by all EU states should be seen as a long-term ambition rather than an immediate goal, and compulsory is not the right word! It is essential to sort out the defects in the way the Eurozone has operated in recent years (some of which are structural but most of which are to do with decisions taken by poltiicians who could have chosen to do something different), before or in parallel with any extension of the Euro Area.

Wages and economic recoveries

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Question 2: Do you agree that the different behaviour of UK real wages relative to Eurozone wages during the Great Recession is in large part due to the UK having different labour market policies?

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Answer:
Agree
Confidence level:
Confident
Comment:
In large part, yes. But the difference in behaviour needs to be related to the substantial shift in the balance of power in the labour market, which in turn is related not just to policies - the removal of workers' and unions' rights - but also to the wider social changes embodied in the demise of an autonomous working class culture and to the otherwise unlamented collapse of the Soviet bloc.

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