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

Voting history

Are academic economists ‘in touch’ with voters and politicians?

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Question 1: Do you agree that the economics profession needs an institutional change that promotes the ability to communicate more effectively with policy-makers and the public at large and to make clear when economists have a united view; and do you agree that we need to introduce leadership to help achieve this improvement through coordinated efforts?

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Answer:
Strongly disagree
Confidence level:
Very confident
Comment:
The medical community has two such institutions, the Royal College of Physicians and the British Medical Association. They both clearly came out with united views against Brexit (http://ind.pn/1Zn5QZu), which was a referendum as much about economics as it was about health and medical science given the number of EU-joint policies in this domains. Yet, I see no reason to believe that they succeeded relative to economists at getting their message across (and both failed ultimately in terms of swaying the result). So, to the first part of the question: no, I am not convinced that institutional change to make us more like the Royal College of Nurses would make us more effective in the public debate. To the second part of the question: absolutely not, I don't think more leadership is necessary. As intellectuals, we are more effective when we come up with independent thoughts and arguments that, then when put together, may end up making a diverse strong case for a particular policy option. Surveys like this one ran by the CFM are terrific at reaching this goal. Having a "leader" deciding on what is the "common view" would be stifling to scientific inquiry and ultimately work against academic freedom. These should be our ultimate goals, above the pursuit of policy influence.

Brexit: the potential of a financial catastrophe and long-term consequences for the UK financial sector

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Question 3: What do you think will be the overall economic consequences of Brexit for the UK?

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Answer:
Mildly negative
Confidence level:
Very confident
Comment:
There is great uncertainty on how large the effects will be, but few good arguments and no serious study showing that the effects would be anything but negative.

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Question 2: What is the probability that the UK experiences such a significant disruption to financial markets and asset prices following a vote for Brexit on 23 June?

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Answer:
31-70%
Confidence level:
Not confident
Comment:
"Significant" is too vague to put a precise probability around. But, implied volatility in sterling/dollar 3-month option contracts is very high (around 14%, which is 1.5 times higher than in January) while the betting markets for Brexit seem to put its odds at around 20%. Combining these two numbers, it seems that the financial markets think the unlikely event of Brexit would lead to significant disruption in the value of sterling.

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Question 1: Do you agree that there would be substantial negative long-term consequences for the UK financial sector if the UK were to leave the EU?

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Answer:
Agree
Confidence level:
Confident
Comment:
The removal of passporting rights would likely mean that a few large banks would move out. Whether others would follow or not depends on the strength of agglomeration effects as opposed to other forces for path dependence in spatial development, so it is hard to assess whether the long-term result would be substantial or not. Still, the only way is down: London is currently the clear large financial center in Europe, and none of the arguments for why leaving the EU would improve its position seem plausibly significant.

The future role of (un)conventional unconventional monetary policy

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Question 2:  Do you agree that central banks should operationalise the use of these alternative tools of unconventional monetary policy for use either in the near term, or in the future, as economic conditions warrant?

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Answer:
Neither agree nor disagreee
Confidence level:
Very confident
Comment:
Helicopter money is a dangerous idea, negative interest rates are a good idea, and abolishing currency is a bad idea. Exploring other tools, like buying different assets under QE, and issuing different types of reserves are good ideas to explore in the future. So, I agree with studying and operationalizing new tools, but disagree with some of the ones in the question.

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