Michael McMahon's picture
Affiliation: 
University of Oxford
Credentials: 
Professor of Economics

Voting history

House Prices and the UK economy

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Question 2: Do you agree that a more widespread weakening of the UK housing market will slow UK GDP growth significantly?

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Answer:
Agree
Confidence level:
Confident

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Question 1: Do you agree that the phenomenon of declining house prices will ripple out from the London property market leading more UK regions to experience falling prices?

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Answer:
Disagree
Confidence level:
Confident
Comment:
The London market is experiencing some idiosyncratic developments. While these could ripple out to a few near-neighbouring areas. However, these are unlikely to be the cause of declines in other parts of the country. Instead, other developments such as a widespread macroeconomic slowdown, or a tightening of credit conditions, would likely cause the more widespread slowdown in the UK housing market.

Global risks from rising debt and asset prices

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Question 1: Does the world economy face heightened risks arising from an excess of public and private debt and/or inflated asset prices?

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Answer:
Agree
Confidence level:
Confident
Comment:
I agree there is "heightened risks" but stop short of thinking we are on the verge of another crisis. Debt service costs are low and a natural reaction is to build up more debt. The banks providing the credit, at least in the UK, are better capitalised and I don't think the normalisation of interest rates will take nominal rates to anything like what was the pre-crisis normal (at least in the near term).

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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?

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Answer:
Disagree
Confidence level:
Confident
Comment:
Low debt service costs play a role and hence there is a role for loose monetary policy - as Borio says "unprecedented gradual pace of monetary policy normalisation has played a role". But I don't agree monetary policy is solely responsible nor do I think I would have advocated a faster normalisation over the past years given the objective of most central banks is to maintain price stability in terms of CPI and the pressures on that front have warranted loose monetary policy.

Juncker's State of the Union Address

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Question 2: Do you agree that the euro has had more benefits than costs?

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Answer:
Agree
Confidence level:
Not confident
Comment:
For some countries it clearly does. For others, it is less clear. On balance, I lean toward greater benefits.

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