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

Voting history

The future role of (un)conventional unconventional monetary policy

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Question 1: Do you agree that central banks should continue to use the unconventional tools of monetary policy deployed in response to the global financial crisis as part of monetary policy under normal economic conditions?

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Answer:
Strongly agree
Confidence level:
Very confident
Comment:
The central bank's balance sheet has *always* been a policy tool, especially in open economies where central banks hold foreign reserves. Moreover, even when a central bank chooses interest rates, this is only effective insofar as it is backed by the central bank's ability and willingness to issue reserves, and it partly depends on the assets bought with those reserves. Finally, we know from the monetary transmission mechanism that even setting interest rates affects different financial prices and markets differently, and we rely on this to affect economic activity. The use of QE and other unconventional tools in the recent past has just made us study these issues better, learn more about their effects, and so become more confident about using them in the present and in the future. See http://www.columbia.edu/~rr2572/papers/15-QEfuture.pdf or https://ideas.repec.org/a/aea/jecper/v27y2013i4p17-44.html

National Living Wage and the UK economy

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Question 2: Do you agree that the new NLW will have a muted effect on wages and prices?

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Answer:
Agree
Confidence level:
Not confident
Comment:
Mark Carney's seems about right, allowing again for the uncertainty around any estimate.

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Question 1: Do you agree that the new National Living Wage is likely to lead to significantly lower employment?

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Answer:
Agree
Confidence level:
Not confident
Comment:
As well summarized in the question, the literature is mixed on this question, so I can only be "not confident". At the same time, while the 2016 increase is modest and likely has no clear effect, the target for 2020 seems more generous and so more likely to have a small negative effect on employment overall.

Brexit and financial market volatility

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Question 2: Do you agree that the possibility of Brexit significantly increases uncertainty and volatility in financial markets and the economy in general?

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Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
It definitely increases uncertainty. There are few other political events that would have such a direct and immediate effect on the economy, and especially on international capital and trade flows. I would further expect that investment of firms based in the UK with significant international relations is delayed until the outcome of the referendum is clear.

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Question 1: The value of the pound fell sharply this week. Do you agree that the public debate on Brexit can be expected to (continue to) lead to a substantially higher level of exchange rate volatility in the upcoming months?

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Answer:
Agree
Confidence level:
Very confident
Comment:
Brexit or not should have a large impact on capital flows and trade balances of the UK. Thus, it should have an effect on the sterling exchange rate, at least relative to the euro. Given how close polls are, the public debate should lead to sharp movements in the probability of Brexit, and these should be followed by exchange rate volatility. But we can look at market data to check this hypothesis, by seeing whether the prices of volatility swaps (or other ways to hedge against this risk) have gone up. I don't have that daily data available in my office, but my impression from other data publicly available is that the answer is yes.

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