Richard Portes's picture
Affiliation: 
London Business School and CEPR

Voting history

Greece’s elections and the future of the Eurozone

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Question 1: Do you agree that a Syriza victory on 25 January would lead to a significant or sustained escalation in spreads for other peripheral Eurozone countries?

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Answer:
Disagree
Confidence level:
Confident
Comment:
New firewalls against contagion are some comfort, and ECB will have announced some version of QE by then.

2014 Autumn Statement

 

Question 2: Do you agree that the underperformance of tax receipts in recent years, provides a strong case for higher taxes?

Answer:
Agree
Confidence level:
Very confident

Question 1: Do you agree that the scale of this planned reduction in total managed expenditure is credible?

Answer:
Strongly Disagree
Confidence level:
Very confident

Secular Stagnation

Question 2: Do you think that current structural and fiscal policies should place a considerably greater emphasis on pushing the natural rate into positive territory?

Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
Although there is no evidence of a 'long run decline in real rates' (see answer to Q1), even the US and UK would benefit from policies that would raise the natural rate, a fortiori the euro area and Japan. But they would also benefit from a move to higher inflation targets, which could bring down real market rates and give some room for monetary policy. Alas, this will not happen.

Question 1: Do you agree- making your own definition of secular stagnation clear if you disagree with that offered here- that it is more likely than not that the advanced Western economies have entered into a period of secular stagnation?

Answer:
Agree
Confidence level:
Very confident
Comment:
What is the evidence? Real policy (short-term) interest rates are negative in all major advanced economies - all nominal at (or even below) ZLB. Even real 10-year rates are around zero or below, deflating by expected inflation rates. And yet all of these economies are below full employment, showing substantial output gaps. This is pretty strong evidence that the Wicksellian natural rate is currently well below zero. But is this a long-term phenomenon ('secular')? Not obvious. The claim that real rates have been 'historically low' from the beginning of the 2000s is false - there were significant periods of negative real rates in the 1960s and 1970s in the US and UK. But there are some arguments underlying secular stagnation mentioned in question 2 that I find fairly strong.

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