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

Voting history

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:
If anything, there is political pressure to raise interest rates more than the central banks would like to. If central bank independence falls then people like former Conservative Party leader William Hague will have more influence. He wants interest rates to rise to reward savers, but if this happens then inflation would actually turn out to be lower than it would be under a fully independent Bank of England. German Finance Minister Wolfgang Schäuble has similarly criticised the European Central Bank’s low interest rates as being damaging for people saving for retirement and he’s worried that low rates drive people towards anti-euro and anti-immigration parties. So it depends on what equilibrium we get without a credible central bank – it’s not necessarily the high inflation bias that Kydland and Prescott first warned us about.

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Question 1: Do you agree that central bank independence in the Eurozone and the UK will decline over the next 48 months?

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Answer:
Agree
Confidence level:
Not confident
Comment:
The original rise in central bank independence was motivated by successful taming of inflation in the 1980s, a success that would have delighted Mervyn King in his long-held ambition for monetary policy to be boring. It didn’t turn out that way, as the pronouncements of “rock star” central bankers such as Greenspan, Bernanke, Draghi and Carney continued to dominate the economic news agenda. But this cult of the expert was inevitably destined for a populist fall, as seen in the US presidential election and Michael Gove’s “Britain has had enough of experts” during the Brexit referendum. The worry is that central bank independence has not been fully institutionalised, but rather has rested on the strong personalities of central bankers. The taking on of additional responsibilities by central banks and the blurring of the boundaries between monetary and fiscal policy can only add to the pressures on central bank independence. I take some comfort from the decision by Governor Carney to remain at the Bank of England until June 2019, by which time Britain may have rediscovered its taste for experts.

Are academic economists ‘in touch’ with voters and politicians?

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Question 7: Voters did not know that there was near-unanimity among economists.

Do you agree that this was an important reason for a majority of UK voters going against the near unanimous advice of the economics profession?

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Answer:
Disagree
Confidence level:
Not confident

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Question 6: Economists did not explain the reasons for this consensus in sufficiently clear language.

Do you agree this was an important reason for a majority of UK voters going against the near unanimous advice of the economics profession?

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Answer:
Disagree
Confidence level:
Confident

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Question 5: Voters think that the preferences of economists do not align with their own preferences. (This includes the possibility that they thought that the predicted negative economic consequences would not affect them personally).

Do you agree this was an important reason for a majority of UK voters going against the near unanimous advice of the economics profession?

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Answer:
Strongly agree
Confidence level:
Confident

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