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

Voting history

Happiness and well-being as objectives of macro policy

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Question 2: Do you agree that quantitative well-being analysis should play an important role in guiding policy makers in determining macroeconomic policies?

 
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Answer:
Disagree
Confidence level:
Confident
Comment:
This is a much higher bar than the previous question, since it suggest that quarter-to-quarter, or at least year-to-year, measures in happiness should guide the fine tuning of policies. (This is what I understood as macroeconomic policies, as opposed to long-run investments, which were covered in the previous question). For higher frequencies, I am not convinced that the signal-to-noise in the happiness measures is large enough to be a good indicator.

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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:
Agree
Confidence level:
Confident
Comment:
There has been remarkable progress in this area in the past two decades. In the same way that measures of health (infant mortality), inequality (Gini coefficients), absolute poverty (poverty rates) and others affect policy, it seems that measures of happiness may also be considered. They should be in the list of a few dozen indicators that policymakers keep in mind. All of these are complements to GDP though, not substitutes.

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:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
Same answer as to the previous question, although my impression was that the literature is less kind to regional policies relative to industrial policies.

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

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Answer:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
Research on this topic seems to me to be quite inconclusive, with some evidence for some positive returns (https://ideas.repec.org/p/cep/cepdps/dp1113.html or https://www.aeaweb.org/articles?id=10.1257/mac.20120103), and other evidence for neutral or negative effects (http://voxeu.org/article/surprising-prevalence-surprises-export-specialisation or http://www.nber.org/papers/w18694). If a new industrial policy is adopted, then it is probably wise to keep it modest and use recent research to design it effectively.

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:
Strongly agree
Confidence level:
Very confident
Comment:
Among all economic policymaking institutions in most advanced countries today, central banks tend to be the better prepared, the better informed, and make the more sensible decisions. Their success at keeping inflation close to targets in the past 15 years has been extraordinary. Their responses to the financial and debt crisis were, with all their flaws and shortcomings, still much better than that of almost all other policy institutions. I am worried that there has been too much discretionary policymaking, and too quick of an embrace of financial stability as a goal that can be achieved by the central bank alone. But for now, the track record of independent central banks is very good.

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