Giancarlo Corsetti's picture
Affiliation: 
University of Cambridge
Credentials: 
Professor of macroeconomics

Voting history

Greece’s elections and the future of the Eurozone

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Question 2: Do you agree that refusal of the core EU countries to a renegotiation of the Greek bailout agreements would carry serious risks for the economic well-being of the Eurozone?

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Answer:
Agree
Confidence level:
Confident

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Question 1: Do you agree that a Syriza victory on 25 January would lead to a significant or sustained escalation in spreads for other peripheral Eurozone countries?

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Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
By now, it is well understood that the crisis of the Eurozone is first and foremost a crisis in political cohesion among its state members. There is little trust, and little communication/sharing concerning the root causes of the current stagnation and thus no consensus on the appropriate interventions. With delay in undertaking appropriate measures and lack of action, the Eurozone has managed to engineered its own self-inflicted recession, unfortunately with global repercussions. The election in Greece will have an effect on spread depending on their impact on the current political equilibrium. Independently of Greece, there are many governments who are insisting on the need to sustain demand, with both fiscal and monetary policy. It is in their interest that whatever happens in Greece does not interrupt the ongoing negotiation/dialogue (so far very tenuous). What may threaten financial stability is actually the reaction of the surplus countries, if their leaders read the political outcome of Greece as a leading indicator of political instability in the Eurozone, and become even more pessimistic about its future.

Devolving Income Tax Powers within the UK

Question 1: Do you agree that the economic benefits of devolving full income tax powers to the Scottish Parliament and Welsh Assembly outweigh the possible costs?

Answer:
Disagree
Confidence level:
Confident
Comment:
As the background information to the question correctly points out, how much devolution of power is desirable requires an assessment of its effects on efficiency, stability and equity 'within the UK'. This assessment is a complex task. Devolving full income tax powers may in principle be a solution, but as an outcome of this comprehensive assessment, not as a starting point. There are examples of strong devolution (the Basque Region in Spain) that could provide a relevant benchmark.

Question 2: Do you agree that that there is a clear economic case for establishing "English votes for English laws" with the same tax and spending powers as the Scottish Parliament?

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
The question is whether the entire UK should turn into a federal state, rather than a national state granting greater autonomy to some small regions. There are concrete examples of both models. One relevant issue is whether the fully federal system may require a reduction in the autonomy of small regions, relative to the existing aspirations by local constituencies.

Secular Stagnation

Question 2: Do you think that current structural and fiscal policies should place a considerably greater emphasis on pushing the natural rate into positive territory?

Answer:
Agree
Confidence level:
Confident
Comment:
The key question however concerns the mix of instruments and strategies. In countries with a high vulnerability to sovereign risk crises, the combination of structural and cyclical policies may be difficult to achieve, in a regime of low credibility. For the euro area, the system-wide common policy strategy and the level of cooperation may vastly outweigh domestic initiatives.

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