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

Voting history

Deal or no deal: The Greece standoff

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Question 3: Do you agree that implementation of the agreement will lead to an expected decrease in Greek debt repayments?

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Answer:
Disagree
Confidence level:
Not confident
Comment:
Current terms as discussed in the media seem not to include any debt relief, but maybe it will follow later. However, debt relief is what Greece (and the Eurozone) need. And we economists need to mount a stronger challenge to the misguided economic policy thinking of the German establishment.

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Question 2: Do you agree that Greece would be better off defaulting right now rather than signing to the agreement under consideration?

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Answer:
Disagree
Confidence level:
Not confident
Comment:
If default without Grexit were feasible, that might be okay, but it seems unlikely that Germany and others would be willing to allow that (for political rather than economic reasons). In that case default presages exit and a deeper and longer recession.

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Question 1:  

Do you agree that, on balance, the implementation of the agreement as outlined in media reports will have a non-trivial negative effect on Greek GDP?

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Answer:
Agree
Confidence level:
Not confident
Comment:
There is a question about the appropriate counterfactual, and a question about the time frame: some short term negative effect relative to current values of GDP etc seems unavoidable but the medium term might be better, and the alternative of default might be worse especially in the short term.

Monetary policy and the zero lower bound (ZLB)

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Question 2: Do you agree that the benefits of reforming the monetary system to allow materially negative policy interest rates outweigh the possible costs?

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Answer:
Strongly Disagree
Confidence level:
Very confident
Comment:
The source of the problem is the prohibition on the use of fiscal policy: relaxing that ban (which cannot be justified by economic theory and is essentially ideological) is the efficient and cost-effective way to deal with existing and any further aggregate demand shortages.

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Question 1: Do you agree that it is feasible for the UK authorities to change the monetary system so that materially negative policy interest rates could be safely implemented? (In answering, you may wish to explain your reasons and define your view of 'material')

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Answer:
Strongly Disagree
Confidence level:
Very confident

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