Simon Wren-Lewis's picture
Affiliation: 
University of Oxford
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:
Strongly agree
Confidence level:
Extremely confident
Comment:
The central role of spells of unemployment for happiness is an excellent example of why these measures are useful in influencing policy. Arguments that such data is not 'well understood' is I'm afraid part of a regrettable tendency in macro to ignore empirical evidence. In this particular case recent empirical studies which show that unemployment can influence the earnings of the children of those unemployed indicate exactly why the happiness results make sense. Central banks should pay much more attention to this happiness data than the implications of what governs social welfare in very simple microfounded models.

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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:
Strongly agree
Confidence level:
Very confident
Comment:
Survey measures of subjective well-being are useful indicator measures of well being. GDP is also an indicator of well being. All indicators have their deficiencies, which means using a range of measures when appropriate. For example, conventional happiness or life satisfaction surveys may indicate changes rather than the level of our well being, which could explain the Easterlin paradox. But these surveys remain very useful indicators.

The Future of Central Bank Independence

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Question 2: Do you agree that the traditional argument that less central bank independence leads to higher inflation will (still) be relevant over the next 48 months in Western economies?

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Answer:
Strongly agree
Confidence level:
Very confident
Comment:
The critical economy is the US. If, as expected, Trump embarks on a large fiscal expansion, the Fed will want to raise rates. They will almost certainly come under political pressure not to do so, and if that pressure succeeds rates may not rise and inflation will be higher. The politics of Trump are sufficiently wild and reactionary that it is quite possible we will see the end of CBI in the US.

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Question 1: Do you agree that central bank independence in the Eurozone and the UK will decline over the next 48 months?

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Answer:
Strongly disagree
Confidence level:
Very confident
Comment:
In current circumstances criticism from Germany shows the ECB is doing its job. Given the centrality of CBI to the architecture of the Euro, the ECB is likely to remain the most independent central bank in the world. The criticism of the BoE has come from the same quarter as gave us Brexit, so their political influence will decline as the folly of Brexit becomes clearer.

German Council of Economic Experts' view of ECB policy

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Question 2: Do you agree that the ECB's monetary policy masks structural problems of member states?

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Answer:
Strongly disagree
Confidence level:
Extremely confident
Comment:
One of the most disastrous ideas coming from Germany is that you require deficient demand to encourage 'structural reform'. It helped delay OMT until 2012, and legitimizes the appalling treatment of Greece. The task of monetary policy should be to stabilize EZ demand and inflation, and not to encourage particular reforms in member states.

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