Jagjit Chadha's picture
Affiliation: 
National Institute of Economic and Social Research
Credentials: 
Professor of economics

Voting history

The Importance of Elections for UK Economic Activity

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:
Agree
Confidence level:
Very confident
Comment:
I really do not like the term austerity, as I see these policies have essentially been those of "sound money": deficits have continued. But the final level of aggregate demand was really being set by the BoE with QE. Thus even looser fiscal policy might have meant less room for QE and with as a result more debt to sell to the private sector, at a risky juncture, long term interest rates may have reacted in way to offset much of the impact and ultimately delay the recovery. In the end it was a judgement about the appropriate policy mix and it is hard not to think that relatively tight fiscal policy - at least in terms of plans about the future level of public debt to GDP - and loose monetary policy was an appropriate choice.

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:
Confident
Comment:
The proposed timetable of the MPC process looks elongated and cumbersome. The advantage of having immediate minutes from the deliberative part of the meeting seems rather limited compared to the creation of a week-long MPC meeting during which all kinds of news may arrive to complicate the policy decision. I would prefer a short, discrete time period for the policy making decision, rather like the one we currently have.
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Question 1: Do you agree that the simultaneous release of the policy decision, the enhanced minutes (including the voting record) of the MPC meeting and (in the relevant months) the release of the Inflation Report will facilitate inference on the likely stance of monetary policy?
 
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Answer:
Disagree
Confidence level:
Very confident
Comment:
A compact statement accompanying the announcement to include the vote makes a great deal of sense as I have argued for a number of years. But there is merit in having enhanced minutes published with a short lag so that aspects of the risks facing monetary policymakers can be digested in between meetings. The Inflation Report, as a full blown forecast, can also be thought of as an exercise worthy of scrutiny, per se, and also an opportunity to consider longer term factors in the policy decisions.

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:
Disagree
Confidence level:
Very confident
Comment:
I suspect that unwinding agreements may run more of a risk in unwinding the Euro Area than allowing re-negotiation. The urgent need is for the ECB to work out how to implement a credible QE programme that will support EZ bond prices and perhaps engineer a further depreciation in the Euro. The re-opening of the the Greek settlement and with it a signal for other agreements to be revamped would threaten an early agreement on Euro Wide unconventional policy.

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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:
Agree
Confidence level:
Very confident
Comment:
A Syriza victory would not only open up wounds between Greece and the Troika that have barely healed from the default of 2012. But also trigger question-marks over the continuation of the Greek membership of the Euro Area and by association the EU. This will lead to a harder examination of the spreads (aka default risks) for other peripheral countries, as well as for Italy. Some form of QE may act to offset the momentum for an escalation in spreads but it will have to be large, clear and actionable.

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