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

Voting history

Brexit and financial market volatility

======================================================================

Question 1: The value of the pound fell sharply this week. Do you agree that the public debate on Brexit can be expected to (continue to) lead to a substantially higher level of exchange rate volatility in the upcoming months?

======================================================================

Answer:
Agree
Confidence level:
Very confident
Comment:
There are two sources of uncertainty: (a) will the UK remain in the EU or vote to leave? and (b) what will happen if the UK votes to leave? Both sources have the power to create currency turmoil as it is unclear what will happen to the UK economy. Therefore, I think turmoil will persist unless the polls start to show voters solidly favouring the UK remaining in the EU.

Market Turbulence and Growth Prospects

======================================================================

Question 2: Do you agree that the falls in share prices, low oil prices and the slowdown in some emerging market economies will have a significant negative impact on the UK’s economic recovery?

======================================================================

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
I see many of these aspects as reflections of what is happening rather than causes. Commodity prices are low because of doubtful growth prospects and the same is the case for asset prices. Of course, should there be another crisis emulating what happened in 2008/09, the consequences could be very dire.

======================================================================

Question 1: Do you agree that economic growth prospects for the global economy have seriously deteriorated?

======================================================================

Answer:
Agree
Confidence level:
Confident
Comment:
There is a lot of uncertainty in the market which is impacting negatively on asset prices and commodity prices. Central bank policies that were rolled out in the aftermath of the financial crisis may paradoxically also have left the economy vulnerable to another bout of financial instability. There are also tensions in the middle east and major policy uncertainty such as the outcome of the UK's vote on the EU, the outcome of the next US Presidential elections etc. Addressing these uncertainties would be important for stabilizing confidence and markets and improving the short to medium run growth prospects.

China’s growth slowdown: likely persistence and effects

======================================================================

Question 2:

Do you agree that if the Chinese slowdown turns out to be persistent, it will have a significant impact on UK growth (say, in the order of a few tenths of a percentage point) and/or it will justify a material change in monetary policy (for example, in terms of the timing and speed of a return to ‘normal’ interest rates) and fiscal policy (for example, in terms of the timing and speed of fiscal contraction).

Answer:
Disagree
Confidence level:
Confident
Comment:
Although China is important for the world economy, it is perhaps not pivotal. But more to the point, I fail to see how UK monetary policy changes can do much about missing chinese growth and why it should have a significant impact on fiscal policy contraction beyond transitional issues.

======================================================================

Question 1:

Do you agree that the Chinese economy is likely (say more than 50% probability) to maintain in the medium term (say, for at least ten years) a rate of annual growth exceeding 6%.

======================================================================

 

Answer:
Agree
Confidence level:
Confident
Comment:
Economic theory suggests that chinese growth should slow down as the economy approaches its longer term growth path. The chinese economy has grown strongly over the last decade and a half but GDP per capita is still far below the levels of the industrialized countries and its richer neighbours such as Japan and South Korea. It is clear that China will have to implement structural reforms to sustain growth over the longer term. Moreover, China has been hit by the drop in demand for its goods from richer countries that has followed after the 2007-09 crisis. On the other hand, it has invested hard in physical capital and human capital is following behind. Based on this, over the medium term, my view is that China should be able to sustain a reasonable level of growth unless market reforms are reversed.

Pages