Morten Ravn's picture
Affiliation: 
University College London
Credentials: 
Professor of economics
Head of Department

Voting history

Bitcoin and the City

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Question 2: Do you agree that the regulatory oversight of cryptocurrencies needs to be increased?

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Answer:
Agree
Confidence level:
Confident
Comment:
I don't see why. It seems pretty obvious that the cryptocurrencies have appeal for illicit markets and for tax evasion, both issues of concerns to policy. This should be regulated.

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Question 1: Do you agree that cryptocurrencies are currently a threat to the stability of the financial system, or can be expected to become a threat in the next couple of years?

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Answer:
Disagree
Confidence level:
Confident
Comment:
They seem too small at the moment to be a threat. Also, were a cryptocurrency to implode, the impact would probably be less country-specific than, say, a sudden large decline in London house prices, and this might indicate a less dramatic impact on financial stability. Of course, exponential growth in cryptocurrencies could change this within a reasonable horizon so it would seem prudent for policy makers to keep an eye these currencies.

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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Make sure to save each question separately

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
Should house prices drop significantly, the consequences could be dire at least in the short to medium term due to the impact on households. This would be exacerbated by increasing interest rates and one might be worried about the stability of the economy especially in case of a non-orderly Brexit outcome. On the other hand, UK house prices are crazy and many UK households use housing as their main savings vehicle which seems inefficient and may be one of the factors behind the low productivity of the UK economy. A dis-orderly Brexit could further worsen this issue if there are negative effects on the UK economy's competitiveness due to loss of access to the EU internal market. This would suggest that introducing capital gains taxes (to make housing less attractive as a savings vehicle) could help address both the high cost of housing in the UK and the UK's poor productivity performance. It's hard to see that this would be politically feasible though.

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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:
Neither agree nor disagree
Confidence level:
Confident
Comment:
If there is a large drop in London house prices, I do think it will spread to the commuter belt and beyond. But things are still very uncertain. At this very point in time, uncertainty effects probably dominate but there are also fundamental issues going on in the background. On the demand side, London real estate prices will be sensitive to how Brexit negotiations work out for a variety of reasons. First, the fate of the financial sector will be important for determining higher end demand. Secondly, more broadly, the impact of Brexit on trade and therefore on household permanent income will impact on demand. Third, the nominal exchange rate will impact on foreign demand for housing in London. Fourth, it remains to be seen how Brexit will impact on immigration flows which of course also impact on house prices. The first and third factor are missing from non-London areas apart from the ripple effects on the commuter belt, in particular. Furthermore, while a falling pound might stimulate foreign demand for London housing, it will also bring upward pressure on the interest rate, at least temporarily, which would indicate a more subtle difference in the factors impacting on house prices in London and outside. On top of this there are of course supply side effects but they are likely to be less important in the short run. So, in summary, there are both ripple effects, common effects, and differential trends. Until the outcome of the Brexit negotiations become clearer it is hard to say which factor will dominate but the negative impact of Brexit on house prices seem to be setting in as expected.

Global risks from rising debt and asset prices

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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:
Neither agree nor disagree
Confidence level:
Confident
Comment:
loose monetary policy surely has not helped but is just one of the factors behind it.

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