Paolo Surico's picture
Affiliation: 
London Business School
Credentials: 
Associate professor of economics

Voting history

Prospects for Economic Growth in the UK April 2014

Question 2

Do you agree that, in the wake of the financial crisis, any downward adjustment to the expected average annual long-term growth rate of the UK economy is likely to be by less than 0.25 percentage points?

Answer:
Agree
Confidence level:
Confident

Question 1

The long period of slow or negative growth might imply that there is a substantial output gap in the UK economy.  Do you agree that there is currently a larger output gap than the OBR estimate to the extent that the shortfall in output relative to capacity is 3% or greater?  

Answer:
Agree
Confidence level:
Confident

Responsible long-term fiscal policy (pilot survey)

Second question:

To help ensure that advanced country governments pursue responsible fiscal policies, countries should adopt formal rules for limiting structural deficits, which are supported by primary legislation or constitutional reform.

Answer:
Strongly Agree
Confidence level:
Confident
Comment:
There is a classical trade-off here between rules and discretion and the hard judgement call is about the size of the maximum structural deficit (in percentage of GDP) that minimizes the losses associated with each scenario. While I am in favour of a numerical value (see also my comment above), I find the proposal of running a balanced budget too restrictive and probably less credible than a lower percentage of GDP.

First question:

To help ensure that advanced country governments have sufficient flexibility to respond to future crises, it is important that finance ministries aim for a ratio of public debt to GDP that is substantially less than 60% in normal times.

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
An explicit reference value has proved a very transparent strategy to communicate monetary policy actions and a very effective guidance to coordinate the public expectations under (de-iure or de facto) inflation targeting regimes. It seems plausible to think that a similar framework may be useful to anchor investors' expectations in the government bond market. On the other hand, it seems hard to justify a specific numerical value relative to another one, as much as it is not unconceivable that an inflation target of, say, 3% (as opposed to the actual 2% in the UK) would have achieved a similar performance in terms of inflation stability since 1992.

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