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

Voting history

Transparency and the Effectiveness of Monetary Policy following the Warsh Review at the Bank of England

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Question 2: Do you agree that the Bank's proposal to release the policy decision, MPC minutes and (once a quarter) the Inflation Report all at the same time justifies a change in the structure of MPC meetings from two consecutive days to a process in which in the MPC meetings are spread out over seven days?
 
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Answer:
Neither agree nor disagree
Confidence level:
Very confident
Comment:
This is a hard one. No doubt, there will be some speculative trades going on in between the decision being made and it being made public. It is not clear to me that the new arrangement is actually more transparent than the old one. On the other hand, writing minutes is time - and effort - consuming so it would seem hard to have simultaneous releases of all the relevant information without making the process longer. But, if the 7 day period could be shortened, I personally think it would imply a more effective communication strategy.
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Question 1: Do you agree that the simultaneous release of the policy decision, the enhanced minutes (including the voting record) of the MPC meeting and (in the relevant months) the release of the Inflation Report will facilitate inference on the likely stance of monetary policy?
 
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Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
The simultaneous release of the Inflation Report, the minutes and the MPC decision is a good move. It enables market participants to gain a good understanding of the background for the current decision and for what is to come down the road. Compare it with a situation where the release of information does not occur simultaneously and where new information arrives in the intermittent period - such a schedule would question why policy should not react to the new information. So, as such, this is a good move.

Greece’s elections and the future of the Eurozone

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Question 2: Do you agree that refusal of the core EU countries to a renegotiation of the Greek bailout agreements would carry serious risks for the economic well-being of the Eurozone?

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Answer:
Neither agree nor disagree
Confidence level:
Very confident
Comment:
I think this question can only be answered by being more specific and by conditioning on events. If Greece says "renegotiation or we leave the Euro", refusal may indeed produce further uncertainties in the Eurozone in particular in the event that Greece manages to use the exchange rate to stabilize the economy. I see this as unlikely though - at least for the foreseeable future - as a euro exit would probably generate a Greek banking crisis. In this case, a Greek exit may discipline other Eurozone countries. On the other hand, if an adjustment of the Greek agreement can prevent the Greek crisis from escalating, then refusal to reconsider it would carry risks. So I think one needs to look at the particulars of the discussion as it progresses to make a firm evaluation of risks.

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Question 1: Do you agree that a Syriza victory on 25 January would lead to a significant or sustained escalation in spreads for other peripheral Eurozone countries?

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Answer:
Disagree
Confidence level:
Very confident
Comment:
I think that there would be an increase in the spreads for other peripheral countries in the SHORT RUN but I do not think they will persist. In the short run, contagion effects are likely to increase spreads. Obviously, if Syriza wins and successfully negotiates a debt write-down, it sets an example for other countries and therefore could lead to a sustained increase in spreads. But I think this is unlikely for many reasons. First, any concessions from the Troika are likely to impose other costs on Greece. Secondly, there is already some decoupling between Greece and other peripheral countries in that their outlook and economic conditions do differ significantly. Only in the unlikely event that the situation is handled in a very bad manner giving financial markets reason to believe that other peripheral countries will receive similar treatments do I see a reason to expect a SUSTAINED escalation in spreads for other peripheral Eurozone countries.

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:
Very confident
Comment:
The underperformance of tax revenues is probably quite closely related to the changes in the income distribution combined with tax exemptions at the lower end and increasing marginal rates at the higher end. On the other hand, these aspects are also important for understanding why employment is recovering and why the UK economy is doing well in terms of income growth. Increasing taxes would be very likely to produce higher tax revenues (I do not think that we are on the wrong side of the Laffer curve) but would also endanger the recovery.

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