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

Voting history

Euro Area Deflation and Risk for UK Economy May 2014

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.

Question 2

Do you agree that, in the wake of the financial crisis, any downward adjustment to the expected average annual long-term growth rate of the UK economy is likely to be by less than 0.25 percentage points?

Answer:
Agree
Confidence level:
Confident
Comment:
The average growth rate of real GDP in the UK has been stable and close to 2% p.a. since 1830. The average UK growth rate in the ten years after a recession has been less than 1.75% p.a. only once, which happened after the 1974 recession because of the recession that followed hot on the heels in 1975. If anything, the UK economy often appears to "bounce back" after a recession, with higher than average growth rates. For example, UK real GDP grew on average at 3.36% p.a. in the ten years after the end of the Great Depression.

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