Jonathan Portes's picture
Affiliation: 
KIng's College, London
Credentials: 
Professor of Econoics and Public Policy

Voting history

Global risks from rising debt and asset prices

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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?

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Answer:
Agree
Confidence level:
Not confident
Comment:
It is likely to be a contributing factor but not necessarily main cause. Nor does it follow that tighter policy b- rather than stronger/better targeted regulation, higher capital bequirements etc - should be the policy response

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Question 1: Does the world economy face heightened risks arising from an excess of public and private debt and/or inflated asset prices?

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Answer:
Strongly agree
Confidence level:
Very confident
Comment:
It is very difficult to reconcile current levels of equity valuations and very low long term interest rates. Market measures of volatility/risk also seem implausibly low. It is of course almost impossible to call "bubbles" ex ante but some at least of the obvious warning signs are there. And it is even harder to predict precisely how a sharp reversal would manifest itself and how large any negative consequences would be - but again history suggests we should be worried

Wages and economic recoveries

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Question 2: Do you agree that the different behaviour of UK real wages relative to Eurozone wages during the Great Recession is in large part due to the UK having different labour market policies?

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Answer:
Agree
Confidence level:
Very confident
Comment:
The evidence seems clear that falls in unemployment in the UK have not had the same impact on real wage growth as before the crisis (see work by Machin and Blanchflower). This is true even over the last few years of low inflation (after the 2011 spike). This seems likely to be the result of two factors: first, structural changes in the UK labour market (in particular the growth of forms of insecure and precarious work). Note that this is not really about regulation or law: the UK labour market is somewhat more regulated than in say 2000, but rather changes in technology and work practices. Second, the astonishingly poor productivity performance of the UK since the crisis, which is likely both to reflect demand and supply side issues.

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Question 1: Do you agree that lower real wage growth was beneficial for employment levels during the Great Recession?

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Answer:
Agree
Confidence level:
Very confident
Comment:
In the UK, it seems clear that low real wage growth helped support employment in the downturn, and helped boost employment growth in the subsequent period. This was not entirely benign: to the extent low real wage growth was driven by increases in the insecurity and precarity of employment, this may have resulted in an overall reduction in the quality of employment for many. However, to the extent that low real wage growth was the result of persistently weak productivity (driven by other factors), it is arguably preferable that the inevitable pain that resulted should be shared rather than concentrated on the unemployed. In other countries, this is less clear; for example in Greece, lower wages probably were not only the result of low aggregate demand, but further lowered demand, so negating any beneficial impacts on overall employment.

The Future of Central Bank Independence

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Question 2: Do you agree that the traditional argument that less central bank independence leads to higher inflation will (still) be relevant over the next 48 months in Western economies?

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Answer:
Disagree
Confidence level:
Confident
Comment:
The traditional frame is increasingly irrelevant. Higher inflation has not been a problem - quite the opposite - in advanced economies for most of the last decade. That doesn't mean it won't be in future but the relationship between independence/politicisation and economic outcomes will be much more complex

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