Ethan Ilzetzki's picture
Affiliation: 
London School of Economics

Voting history

Deal or no deal: The Greece standoff

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

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

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

Answer:
Disagree
Confidence level:
Not confident
Comment:
An outright Greek default on the IMF might unleash an economic hurricane on Greece and is a very risky strategy.

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

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?

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

Answer:
Agree
Confidence level:
Confident
Comment:
Based on current reports, much of the tax increases will be in the form of labor taxes, with increases as large as 4%-points. With unemployment in Greece at Great Depression rates, such tax increases cannot possibly help. Reform of the Greek pension system is important, but indiscriminate cuts decided in midnight meetings could also be very costly.

Monetary policy and the zero lower bound (ZLB)

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

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

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

Answer:
Strongly Disagree
Confidence level:
Extremely confident
Comment:
It is neither desirable nor necessary to reform payment systems in order to lower interest rates further. The central bank should raise its inflation target to 5% and will gain the ability to lower the real interest rate by 300 basis points below the rates it currently can. There is no evidence that a higher inflation target has any real costs, and many emerging markets have done so successfully.

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

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')

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

Answer:
Strongly Disagree
Confidence level:
Extremely confident
Comment:
This proposals are ivory tower ideas that should not be attempted. The move to electronic money should occur due to the relative costs and benefits of transacting with these new technologies, not by fiat to allow the central bank to conduct an unconventional policies. Stamping money and the variable exchange rate ideas have enormous transactions costs that would strongly outweigh the benefit of dropping the policy rate by 50 basis points.

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:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
My response is based on both political and economic factors. On the political side, my current expectation is of hung parliament. Whoever will govern will have difficulty in setting a clear agenda. From an economic perspective, no party has put forth proposals that are a magic bullet for the UK's long term economic challenges. Overall, the public tends to overstate the ability of governments to affect economic outcomes in the short run--except in some extreme cases. I do see a couple of downside risks. These include a referendum on the EU that creates economic uncertainty and populistic anti-imigration policies.

Pages