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

Voting history

2014 Autumn Statement

 

Question 2: Do you agree that the underperformance of tax receipts in recent years, provides a strong case for higher taxes?

Answer:
Disagree
Confidence level:
Confident
Comment:
I believe it is likely that tax revenues will have to be increased. This does not mean that rates on tax instruments which have underperformed, e.g. income taxes, need to be raised. There are two issues: 1. do we think that the underperformance will be persistent, or whether there could be a faster than expected pick up in tax receipts as / if the recovery gathers pace; 2. it may be an opportune moment to rethink the use of all tax instruments and to reoptimise toward taxes other than income taxes.

Devolving Income Tax Powers within the UK

Question 2: Do you agree that that there is a clear economic case for establishing "English votes for English laws" with the same tax and spending powers as the Scottish Parliament?

Answer:
Agree
Confidence level:
Confident
Comment:
Devolution of power may even benefit regions within England. This would allow, for example, the North of England to compete with Scottish fiscal decisions, as well as competing with the South of England.

Question 1: Do you agree that the economic benefits of devolving full income tax powers to the Scottish Parliament and Welsh Assembly outweigh the possible costs?

Answer:
Disagree
Confidence level:
Confident
Comment:
I can see some potential benefits but my main concern is that there could be detrimental effects of income tax competition which affect the allocation of public services. Moreover, in the absence of devolved borrowing powers, there could be a large cost from counter-cyclical fluctuations in taxes as I am not confident that there would be enough discipline to build up sufficient resources in good times.

Secular Stagnation

Question 2: Do you think that current structural and fiscal policies should place a considerably greater emphasis on pushing the natural rate into positive territory?

Answer:
Agree
Confidence level:
Confident
Comment:
Given the lack of monetary policy options at the moment, I do believe that efforts should be taken to attempt to both reduce the supply of saving, especially precautionary saving, and also boost the demand for investment. All possible policies should be considered and evaluated.

Question 1: Do you agree- making your own definition of secular stagnation clear if you disagree with that offered here- that it is more likely than not that the advanced Western economies have entered into a period of secular stagnation?

Answer:
Agree
Confidence level:
Confident
Comment:
If defined by a period of negative real interest rates and low growth, then I do believe that the major Western economies are likely to enter a period of secular stagnation. The part that I am uncertain about is the extent to which secular stagnation requires the cause to be weak demand and the extent to which what we are seeing now is purely a demand driven story. The current weakness of the economy likely gives rise to a negative output gap, but I doubt that output gap is that large - certainly much lower than the output gap implied by extrapolating pre-crisis trends. I think it is quite likely that not only has the level of potential GDP fallen, but so too has potential GDP growth. And that trend growth may remain subdued for the coming years.

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