John Driffill's picture
Affiliation: 
Birkbeck College, University of London
Credentials: 
Professor of economics

Voting history

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:
Disagree
Confidence level:
Confident
Comment:
If maintaining anything near full employment with roughly balanced public sector budgets and with inflation at the levels of current targets becomes impossible, then there may be a case for setting higher inflation targets so there is more room for negative real interest rates. At the same time very low or negative real interest rates provide a strong case for more public borrowing to finance more and better public capital and infrastructure, and even, if necessary, some current spending financed by borrowing or printing money.

Question 1: Do you agree- making your own definition of secular stagnation clear if you disagree with that offered here- that it is more likely than not that the advanced Western economies have entered into a period of secular stagnation?

Answer:
Disagree
Confidence level:
Not confident
Comment:
The rate of growth of real GDP per head with full employment -- employment at the natural rate or non-accelerating-inflation rate or equilbirum unemployment -- depends largely on technical progress, new innovations coming along that will raise productive potential. These may or may not slow down in the coming years. They may speed up. Who knows? Keeping economies at full employment is another matter. The new innnovations may or may not need a lot of investment in new capital equipment, demand for which will stimulate spending and keep economies at full employment without needing negavie real interest rates and/or lots of debt- or money-financed government spending. Stagnant or falling populations of long-lived people saving for a long work-free old age may produce more saving than an economy can absord at positive real interest rates without a lot of public sector borrowing.

Migration and the UK economy August 2014

Question 2: Do you agree that current government policies with respect to non-EU migration (including policies on students, skilled workers, and family migration) are effective in maximizing the gains to the economy from migration while minimizing any possible negative impact to specific groups?

Answer:
Strongly Disagree
Confidence level:
Confident
Comment:
The rhetoric of the current UK government on immigration is deplorable. Their policies are illiberal, short-sighted and damaging to the economy and society. It is appalling that this electorally weak administration appeases UKIP and the tory right wing in its efforts to cling on. It's policies on immigration have nothing to do with the gains to the economy (or effects on society) and everything to do with staying in power.

Question 1: Do you agree that migration to the UK can be expected to be beneficial for the average income of current UK inhabitants in the upcoming decade?

Answer:
Agree
Confidence level:
Confident
Comment:
A complex issue. More inward migration -- more workers entering the country -- would, in a simple world, lower the rewards to labour and raise the return on capital. Wages and salaries per worker would fall but yield on capital rise. It's made more complex by the effects of additional workers on the governments tax revenue and benefit payments: immigrants contribute to taxes more than they raise benefit payments, reduce the problem of an aging population and pensions. More workers entering may raise the proportion of highly skilled and entrepreneurial people in the population and thereby raise average incomes. Benefits of migration may be offset partly as more workers impose more pressure on infrastructure. In any case, some groups in the population will gain from migration, while others lose. All the evidence is that migration has been beneficial. Allowing more migration into the UK is just part of a bigger picture in which countries generally adopt more liberal poliicies towards movement of people. The UK's policies can't be taken in isolation. We all enjoy more freedom. Migration is another issue on which the economic effects are only part of the story and arguably not the most important.

UK House Prices and Macro-Prudential Policy July 2014

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Question 2: When housing-related risk is deemed excessive from the viewpoint of financial stability, do you agree that the correct response is to deploy macro-prudential tools, leaving interest rates focused on the needs of inflation and aggregate real activity?

 
Answer:
Strongly Agree
Confidence level:
Extremely confident
Comment:
This one is a no-brainer, surely. The financial institutions need to be prevented from taking on too much exposure to a fall in property prices. Decisions that appear rational to individual institutions are unlikely to be in the public interest; external restraints are needed. And individual borrowers should not be able to take on loans that they are likely to be unable to service: it encourages speculative investment that imposes costs on other people.

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