Patrick Minford's picture
Affiliation: 
Cardiff Business School
Credentials: 
Professor of economics

Voting history

Happiness and well-being as objectives of macro policy

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Question 1: Do you agree that subjective well-being measures, or at least some of the subindices from the typical survey measures, are now reliable enough to give useful insights when used in macroeconomic empirical analysis?

 
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Answer:
Disagree
Confidence level:
Not confident
Comment:
For most policies in macroeconomics, to which I limit my comments, we have quite specific objectives related to welfare such as economic instability, or growth or inequality. It is hard to see how we can design a model that predicts 'happiness' without going through these mediating measures. The happiness measures are not necessarily useless but the point I am making is that what we really want to know is the specific effects of policies on the key features such as the above. If in spite of improving economic policy in these dimensions there was no associated movement in 'happiness' as in the Easterlin paradox, the reason could well be that the we simply cannot measure the subdivided happiness caused by this improving dimension.

A “new” UK industrial strategy ?

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Question 2: Do you agree that the UK needs a new regional policy?

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Answer:
Disagree
Confidence level:
Not confident
Comment:
Again it really depends what you mean. A policy of aggressively promoting 'regional' growth (and leaning against London and the SE) involves politicians making judgements about the economy's structure for which they have no basis. However there has always been a willingness to help struggling regions to get over supply shocks- e.g. the contraction of the coal and steel industries. This makes perfect sense for a nation with solidarity. Indeed it can be thought of as a prerequisite for a successful currency union.

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Question 1: Do you agree that the UK needs a new industrial policy?

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Answer:
Agree
Confidence level:
Not confident
Comment:
It really depends what is meant by this. Much of what the new committee has said is motherhood and apple pie. The government has to provide infrastructure and supports science through various initiatives with universities and so on. R&D contributes to growth, as does human capital creation and the creation of a pro-business climate through lowering barriers to entry and to entrepreneurship. The part of the policy that invites ridicule is the 'backing of winning sectors and industries'; but I doubt whether this will gain any traction. The last government wanted to stimulate manufacturing and 'rebalance the economy'. This got nowhere predictably. However the idea that the government should pursue policies that support the business climate and underpin private investment through things government can undeniably do is good. This government will be mainly concerned with getting the Brexit policies right; among them will be good 'industrial policies' of that sort.

The Future of Central Bank Independence

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Question 3: More generally, do you agree that it is desirable to maintain central bank independence? Again focus on the near future, say next 48 months.

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Answer:
Agree
Confidence level:
Confident
Comment:
See my answer to Q2.

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Question 2: Do you agree that the traditional argument that less central bank independence leads to higher inflation will (still) be relevant over the next 48 months in Western economies?

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Answer:
Agree
Confidence level:
Confident
Comment:
Independence still remains important because the independent central bank is an institution which is effective in organising commitment to low inflation. The main problem is that we have seen in the 2000s ineffective action in curbing a damaging credit boom, as in my answer above. We have also seen the excessive rise in bank regulation and incompetence in managing the evolving crisis. Inevitably governments will need to be involved in redefining central bank mandates- preferably towards less distorting regulation and towards more effective control of money and credit. In other words the challenge is to replace inflation targeting with more effective monetary rules that avoid the need for so much regulatory intervention. However this is 'mandate dependence' which already exists. Instrument independence continues to be necessary to ensure commitment to rules.

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