Ethan Ilzetzki's picture
Affiliation: 
London School of Economics

Voting history

Labour Markets and Monetary Policy

======================================================================

Question 2: Do you agree that, in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy makers can afford to wait for greater certainty about real wage developments and building inflationary pressure before raising interest rates?

======================================================================

Answer:
Disagree
Confidence level:
Not confident
Comment:
The Bank of England has an inflation target. Inflationary pressures are starting to mount and it is the Bank's responsibility to respond to them. I agree, however, that the outlook is sufficiently uncertain that taking a gradual approach to interest rate increases is advisable.

======================================================================

Question 1: Do you agree that a strong labour market is a good indicator of building inflationary pressure?

======================================================================

Answer:
Agree
Confidence level:
Confident
Comment:
It is true that the (unconditional) correlation between inflation and employment has weakened, but I have not yet seen persuasive evidence that this implies a structural flattening of the Phillips Curve, nor a good explanation for why this may have happened. I therefore trust basic price theory, which suggests that wages (and therefore prices) will eventually increase if labour market tightness persists. The Phillips Curve was never a causal relationship, but rather a correlation that should hold empirically as long as the majority of price variance is due variation in aggregate demand. When aggregate supply shocks are dominant (as in the 1970s) this relationship reverses. Alternatively, if central banks successfully target inflation and/or inflation expectations are strongly anchored, we’d expect to see a zero correlation between inflation and employment, as is the case today.

Bitcoin and the City

======================================================================

Question 2: Do you agree that the regulatory oversight of cryptocurrencies needs to be increased?

======================================================================

Answer:
Disagree
Confidence level:
Confident
Comment:
It is hard to envision these currencies becoming true alternatives to government-based fiat currencies in the forseeable future, so they will likely continue to be toys for a limitted number of collectors. In terms of financial stability, a more likely threat is web-based financial institutions (internet banks) playing a larger and larger role, augmenting or disrupting the existing financial system. This seems inevitable to me and may change the regulartory requirements dramatically. (And internet banks will largely borrow and lend in government based currencies, not in Bitcoin, ect.)

======================================================================

Question 1: Do you agree that cryptocurrencies are currently a threat to the stability of the financial system, or can be expected to become a threat in the next couple of years?

======================================================================

Answer:
Strongly disagree
Confidence level:
Confident
Comment:
At this point, Bitcoin and other cryptocurrencies remain a toy for a very narrow segment of investors and is detached from the financial system and the real economy.

House Prices and the UK economy

======================================================================

Question 2: Do you agree that a more widespread weakening of the UK housing market will slow UK GDP growth significantly?

======================================================================

Make sure to save each question separately

Answer:
Agree
Confidence level:
Very confident
Comment:
My own research and related research in the US indicates that housing price declines have impacts for the economy as a whole. In research we have conducted on the UK housing market (Cloyne, Huber, Ilzetzki, and Kleven, 2017), we find that a £1 decline in housing prices leads to a 20p decline in borrowing. From US-based research (e.g. Mian and Sufi) it appears that consumption declines follow the decline in borrowing.

Pages