Jonathan Portes's picture
Affiliation: 
National Institute of Economic and Social Research
Credentials: 
Director

Voting history

UK House Prices and Macro-Prudential Policy July 2014

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Question 1: Do you agree it is time for more robust policy action to prevent a build-up of excessive housing-related risk?

 

 
Answer:
Agree
Confidence level:
Not confident
Comment:
The UK housing market is clearly a source of structural problems in the UK economy: now is no exception. However, it is very difficult to assess at any one time whether it is genuinely a macroeconomic problem, and if so what to do about it.

Economic Consequences of an Independent Scotland June 2014

Question 2

Assuming that Scotland becomes an independent country, do you agree that the UK government's position of ruling out a monetary union is in the economic interests of the continuing UK? 

Answer:
Agree
Confidence level:
Very confident
Comment:
Ruling out a monetary union would probably have some costs in terms of trade and reduced economic integration with Scotland. However, the downside risks of a poorly structured or managed monetary union are sufficiently great to justify incurring these relatively small (for the continuing UK) upfront costs.

Question 1

Do you agree that that Scotland would better off in economic terms as an independent country?

Answer:
Disagree
Confidence level:
Confident
Comment:
An independent Scotland, if economic policy were broadly sensible, would probably be slightly worse off than as part of the UK; if both lucky and well managed, it might be slightly better off. However, the downside risks (both exogeneous and arising from the quality of policy making) are quite large.

Euro Area Deflation and Risk for UK Economy May 2014

Question 2

Do you agree that a deflation in the Euro area (as defined in Question 1) would pose a considerable risk to the UK recovery?

Answer:
Disagree
Confidence level:
Confident
Comment:
The direct impact of continued economic stagnation in the eurozone will clearly be negative, but no more so than over the past 3 years, and despite that recovery is now established. If deflation led in turn to serious economic and political instability in the eurozone, that might be different, but that seems unlikely (albeit not impossible) in the short term.

Question 1

Do you agree that there is a significant risk of a sustained deflation across the Euro Area in the coming two years?

Answer:
Agree
Confidence level:
Not confident
Comment:
Although in some models deflation is a threshold: that is -0.1% inflation has a very different impact on other macro variables than 0.1% - I think that in practice this is highly implausible. In my view inflation from 0 to 0.5% is not that different from deflation in its impact and consequences, and we are already there. So while I do not think the probability of negative inflation is much above 25%, nor am I confident in my CPI forecast, I think for practical purposes we are already there, or almost.

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