Michael Wickens's picture
Affiliation: 
Cardiff Business School & University of York
Credentials: 
Professor of economics

Voting history

A “new” UK industrial strategy ?

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Question 2: Do you agree that the UK needs a new regional policy?

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Answer:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
The problem faced by the regions outside the South East is the real exchange rate. The UK economy has become unbalanced due largely to the financial sector in London attracting capital and strengthening sterling. The other regions have found it difficult to export as a result. Regional policy won't help this but Brexit, and its effects on the financial sector, may. Better transport links would help the regions as would better internet connections, especially in rural areas. I am very skeptical about just giving money to local government.

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Question 1: Do you agree that the UK needs a new industrial policy?

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Answer:
Disagree
Confidence level:
Confident
Comment:
I am extremely skeptical about the likely effectiveness of such a policy. In the past, in the UK, it has proved a waste of money and I see no reason why it would be different this time. UK governments have not proved to be good at picking winners either in business and industry or in technology. Government should support research and development in universities and perhaps through tax breaks to industry. Evidence in favour of the role of government in industry is the work of Mariana Mazzucato for the US, but I think it unlikely that this would apply in the UK.

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:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
Recently this has obviously not been true even though central banks have chosen to become flexible inflation targeters. The traditional argument that governments prefer more economic growth to less will always have its effect when there is a need to reduce inflation. This is not a current problem.

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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:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
In recent years many central banks have exceeded their mandate (eg the BoE and the ECB) by trading off their inflation target with targeting real variables such as unemployment and growth. As they have only one instrument and, in effect, two targets, this implies trading off the two and hence making political judgements. Being unelected, yet making political judgements it is only a matter of time before governments either have to alter their mandates or remind them of their primary task. The point about targeting inflation, the ususal mandate, is that a country with a floating exchange rate need a nominal anchor. This can be provided most effectively by delegating monetary policy to central banks. Allowing central banks to undertake broader macroeconomic policy when they don't have the tools is an abdication by government of macroeconomic management. There is no justification for this in the UK - even though the Treasury seems to have run down their macroeconomic expertise alarmingly and is probably no longer properly equipped to conduct macroeconomic policy. Their erroneous assessements about the effects of Brexit is a good example of this lack of expertise.

German Council of Economic Experts' view of ECB policy

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Question 2: Do you agree that the ECB's monetary policy masks structural problems of member states?

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Answer:
Strongly agree
Confidence level:
Extremely confident
Comment:
This is obviously correct; there are a large number of structural problems that need to be addressed in order to stimulate growth. The euro is preventing countries from restoring international competitiveness; using internal deflation to restore competitiveness is very costly. Labour markets need reform. The banks in several countries are close to collapse. Capital markets need to work better. Fiscal policy is constrained by huge debts and large expenditures.

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