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

Voting history

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

The Importance of Elections for UK Economic Activity

Question 2: Do you agree that the outcome of the general election will have non-trivial consequences for aggregate economic activity (employment and GDP)?

Answer:
Agree
Confidence level:
Confident
Comment:
There is a danger that a new Conservative government will just do the same again with fiscal consolidation, while a referendum on EU membership could have a chilling effect. A Labour government will at least largely avoid making that fiscal mistake, and would enable the UK to avoid a referendum.

Question 1: Do you agree that the austerity policies of the coalition government have had a positive effect on aggregate economic activity (employment and GDP) in the UK?

Answer:
Strongly Disagree
Confidence level:
Very confident
Comment:
No claim of expansionary fiscal contractions could possible be upheld in this case. Fiscal consolidation knocked the top off a recovery started by the combination of fiscal and monetary expansion under Labour, it took another two years (and a significant prolonging of the consilidation timetable) before any more recovery emerged, and in the meantime the government had to seek desperately for more methods of monetary expansion.

Transparency and the Effectiveness of Monetary Policy following the Warsh Review at the Bank of England

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Question 2: Do you agree that the Bank's proposal to release the policy decision, MPC minutes and (once a quarter) the Inflation Report all at the same time justifies a change in the structure of MPC meetings from two consecutive days to a process in which in the MPC meetings are spread out over seven days?
 
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Answer:
Strongly Disagree
Confidence level:
Very confident
Comment:
There is a risk of harm to the decision process from spreading it out, there is the problem of news arriving in the meantime, and there is a loss of transparency from the delay in communication (despite the cosmetic fix of having the actual decision taken only the day before). The focus should be not so much on transparency, which is of course a means not an end, but on accountability: we want procedures which ensure that the MPC has to explain itself and engage with its critics (politicians, press, academics, civil society…), both for ‘democratic deficit’ reasons and because such procedures will maximise the MPC’s ability to influence in a useful way the private sector’s expectations of inflation and growth. The Bank’s proposal offers high, even excessive, transparency with no improvement in accountability.

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