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

Voting history

The future role of (un)conventional unconventional monetary policy

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Question 2:  Do you agree that central banks should operationalise the use of these alternative tools of unconventional monetary policy for use either in the near term, or in the future, as economic conditions warrant?

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Answer:
Agree
Confidence level:
Confident
Comment:
‘Helicopter money’ is a type of fiscal policy that may well be beneficial to hand over to central banks. There are many aspects of fiscal policy that are inherently political and so need to remain in the hands of politicians via the Treasury, but the use of discretionary fiscal policy to stabilise the economy is not necessarily one of them. The same caveats apply as before though, in that the independence of central banks is important if not sacrosanct. As for other alternative tools, there’s nothing special about money (is anonymity really such an issue given a decreasingly small proportion of transactions are conducted by cash, especially amongst the young?) so it makes sense to operationalise such tools. At time these tools are needed it will be too late to work out how they might operate.

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Question 1: Do you agree that central banks should continue to use the unconventional tools of monetary policy deployed in response to the global financial crisis as part of monetary policy under normal economic conditions?

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Answer:
Disagree
Confidence level:
Confident
Comment:
There are at least two arguments for why it would be prudent to hold back from using QE in normal times. Firstly, conventional monetary policy is better understood and subject to significantly lower levels of uncertainty and ambiguity. Secondly, QE exposes the central bank to making capital losses and gains that ultimately have to be underwritten by the Treasury. Whilst this does not matter in the consolidated government balance sheet, it could undermine the independence of the central bank at a time when their credibility is not particularly high. Would the central bank have to ask permission from the Treasury to carry out QE actions that would technically leave it insolvent? Would it get permission if it did? Such political economy constraints could erode hard-fought central bank independence.

National Living Wage and the UK economy

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Question 2: Do you agree that the new NLW will have a muted effect on wages and prices?

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Answer:
Agree
Confidence level:
Confident

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Question 1: Do you agree that the new National Living Wage is likely to lead to significantly lower employment?

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Answer:
Disagree
Confidence level:
Confident

Brexit and financial market volatility

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Question 2: Do you agree that the possibility of Brexit significantly increases uncertainty and volatility in financial markets and the economy in general?

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Answer:
Agree
Confidence level:
Not confident
Comment:
It’s difficult to ignore all the theory which predicts that the possibility of Brexit should increase uncertainty. We see it in the exchange rate data, where six-month implied volatility of sterling is at a four-year high, but so far other markets seem less affected. It’s important to separate uncertainty from volatility – they don’t necessarily go hand-in-hand as there can be a lot of uncertainty but if that uncertainty doesn’t matter for markets then there will be no impact on volatility.

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