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

Voting history

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:
Neither agree nor disagree
Confidence level:
Very confident
Comment:
As I mentioned above, I am not in full agreement with the definition of the secular stagnation hypothesis and I think one needs to think beyond real interest rates. To the extent that secular stagnation refers to persistent episodes of levels of activity below potential, I think that monetary and fiscal policy may be important to the extent that they impact on incentives to save but structural reform is perhaps even more important. Unemployment in Greece and Spain are close to 25 percent, youth unemployment is at 50 percent, and I believe it would be foolish to think that this can be addressed by standard stabilization policies only (or even mainly).

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:
Very confident
Comment:
I prefer to refer to secular stagnation simply as a very long recession. By that token, many advanced economies find themselves in a secular stagnation. There ARE exceptions, though: Countries such as Germany and Sweden are back on their pre-2007 trends (and employment has even risen in Germany relative to 2007). Economies such as US and the UK are recovering but are still well below the levels of activity that would have predicted by their pre-crisis trends. Even worse, countries such as Greece, Italy and Spain are witnessing falling levels of activity and have essentially lost 10-15 years of growth. But if you look at other indicators included in the definition above, the picture is very mixed. The level of unemployment is still rising in Southern Europe but is declining in the US. Real interest rates are quite different across countries and demand seem to recovering in some economies but not in others. I think what is missing is that the incentive to save (and invest) depend not only on real interest rates but also on perceived risk which induces precautionary savings thereby depressing consumption and to positive option values of delaying investment projects. Risk, for example, may still be perceived to be high in the US because the duration of unemployment has remained high despite the level of unemployment declining. Thus, I agree to the extent that the definition refers to a long and severe recession while the other parts of the definition are questionable.

Migration and the UK economy August 2014

Question 2: Do you agree that current government policies with respect to non-EU migration (including policies on students, skilled workers, and family migration) are effective in maximizing the gains to the economy from migration while minimizing any possible negative impact to specific groups?

Answer:
Disagree
Confidence level:
Extremely confident

Question 1: Do you agree that migration to the UK can be expected to be beneficial for the average income of current UK inhabitants in the upcoming decade?

Answer:
Strongly Agree
Confidence level:
Extremely confident
Comment:
If properly managed, immigration can contribute very positively to the uk economy. There is strong self selection amongst migrants and they come because of opportunities. My own sector (university) would die without migrants.

UK House Prices and Macro-Prudential Policy July 2014

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Question 2: When housing-related risk is deemed excessive from the viewpoint of financial stability, do you agree that the correct response is to deploy macro-prudential tools, leaving interest rates focused on the needs of inflation and aggregate real activity?

 
Answer:
Neither agree nor disagree
Confidence level:
Very confident
Comment:
I believe that focusing monetary policy on inflation and activity and macro-prudential policy on the financial risks is the right design. However, it has to be emphasized that there are strong interactions - changes in interest rates impact on financial markets and macro-prudential policy interventions will impact on savings and investment and therefore on inflation and aggregate activity. The same is the case for fiscal interventions such as the one that I pointed to above. Thus, the policies need to be strongly coordinated and their spill-overs need to be recognized.

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