Ricardo Reis's picture
Affiliation: 
London School of Economics and Columbia University
Credentials: 
Professor of economics

Voting history

House Prices and the UK economy

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Question 2: Do you agree that a more widespread weakening of the UK housing market will slow UK GDP growth significantly?

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Answer:
Agree
Confidence level:
Not confident
Comment:
The negative impact on the construction sector, which is quite leveraged and already in bad shape according to stock market valuations, and the reduction in consumption would likely lead to a slowdown in GDP growth in the short run.

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Question 1: Do you agree that the phenomenon of declining house prices will ripple out from the London property market leading more UK regions to experience falling prices?

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Answer:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
Predicting house prices (or any other asset price) is close to being a fool's errand. Moreover, the UK's economic prospects have so much uncertainty around them as a result of Brexit, that it is very hard to make any forecasts for the state of the economy or the housing market in particular. Finally, the budget for next year can have a significant impact on house prices depending on what the promised reforms of the UK housing market turn out to be. Given all of these, I find it hard to make a prediction with any certainty on what will happen to house prices.

Global risks from rising debt and asset prices

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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?

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Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
There has been some great research on this topic in the last few years, and there are still many studies underway. My reading of it is that it that it is too early to tell. But I hope that in 2-3 years, I could give a confident answer to this question.

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Question 1: Does the world economy face heightened risks arising from an excess of public and private debt and/or inflated asset prices?

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Answer:
Agree
Confidence level:
Not confident
Comment:
Increases in credit seem to be predictive of financial crises, and likewise for the level of public debt and sovereign debt crises. But the associations are weak, not very stable, unclear if causal, and there are lots of false positives. As for asset prices, "inflated asset prices" is too vague, as there is some "inflated" asset price" in some market almost every day. But, if some negative shock hits the world economy, having higher debt in many cases heightens its negative impact, although stating it this way is not that useful. So, I slightly agree, but with little confidence.

Juncker's State of the Union Address

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Question 2: Do you agree that the euro has had more benefits than costs?

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Answer:
Agree
Confidence level:
Very confident
Comment:
The space is too short to list all the benefits and cost, let alone to quantify them them against each other. I agree especially with this being the right time, with the crisis behind, and European reform ahead, to have a serious reflexion and analysis of the benefits and costs of the euro today. We have data now, and understand better than 30 years ago what the more relevant issues. Expanding the euro by itself without thinking hard about the current flaws in the monetary union (noticeably, the lack of a safe European asset) might well make things worse in the future, even if overall the euro has had more benefits than costs on the past.

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