Martin Ellison's picture
Affiliation: 
University of Oxford
Credentials: 
Professor of economics

Voting history

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:
Strongly Agree
Confidence level:
Very confident
Comment:
The recent Euro crisis shows that it is enormously challenging to have monetary union without fiscal, political and banking union. The question of who provides the ultimate lender of last resort function is also still unresolved in the Euro area, let alone in a possible monetary union between Scotland and the UK.

Question 1

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

Answer:
Strongly Disagree
Confidence level:
Very confident
Comment:
Oil taxes account for about 15% of total tax revenues in Scotland, which creates significant risks and uncertainties for an independent Scottish Exchequer. These will inevitably be reflected in higher risk premium and borrowing costs. The financial sector is also important in the Scottish economy, which creates further risks in periods of financial market turbulence. Experience in Switzerland tells us that sovereigns struggle to stand behind troubled financial institutions that have balance sheets many multiples the GDP of the home country - RBS alone is therefore an obvious concern.

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:
Agree
Confidence level:
Confident
Comment:
If the deflation in the euro area reflects more general global economic malaise then it is difficult to believe there would be no negative effects on the UK economy. The flexibility of an independent exchange rate for the GBP may give some hope that policy options could mitigate the effects of disinflation in the euro area, but possible balance sheet effects of non-GBP denominated debts would be worrisome.

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:
Confident
Comment:
A prolonged period of low inflation in the euro area suggests that the risk of deflation is real. Against this is that long-run inflation expectations (as measured by the survey of professional forecasters) have held up well, although confidence in professional forecasters is not necessarily at an all-time high.

Prospects for Economic Growth in the UK April 2014

Question 1

The long period of slow or negative growth might imply that there is a substantial output gap in the UK economy.  Do you agree that there is currently a larger output gap than the OBR estimate to the extent that the shortfall in output relative to capacity is 3% or greater?  

Answer:
Disagree
Confidence level:
Not confident
Comment:
The somewhat sluggish downward adjustment of UK inflation suggests that the current output gap is not huge. However, recent monetary policy such as quantitative easing may well have caused shifts in the relationship between measured output gaps and (dis)inflationary pressure. It is difficult though to imagine that this justifies an output gap of 3% compared with what the OBR estimates.

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