Simon Wren-Lewis's picture
Affiliation: 
University of Oxford
Credentials: 
Professor of economics

Voting history

Juncker's State of the Union Address

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Question 2: Do you agree that the euro has had more benefits than costs?

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Answer:
Strongly disagree
Confidence level:
Very confident
Comment:
Excess inflation in the periphery and German cost undercutting were both a result of the Euro, and both have had serious consequences. The SGP and fiscal compact that are part of the Euro architecture have destabilised the whole Union (apart from Germany) since the GFC. The Euro was used as a weapon to extract resources from Greece in 2015. I think all of this is down to a badly designed monetary union rather than the Euro itself, but it can hardly be labelled a success.

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Question 1; Do you agree that euro membership should be compulsory for all EU member states?

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Answer:
Strongly disagree
Confidence level:
Extremely confident
Comment:
Why should being part of the Single Market be tied to being part of a monetary union? There is no strong economic reason for this, which is why some countries have been able to opt out of the monetary union. This is politics driving economics, yet again.

Wages and economic recoveries

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Question 2: Do you agree that the different behaviour of UK real wages relative to Eurozone wages during the Great Recession is in large part due to the UK having different labour market policies?

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Answer:
Disagree
Confidence level:
Confident
Comment:
There are two main factors that account for the relatively poor performance of UK real wages. The first is a very slow recovery in GDP per head. This slow recovery is partly the result of UK fiscal austerity, but there are almost certainly other factors at play. The second is the large depreciation in sterling in 2008 during the financial crisis, and now a second depreciation following Brexit. Both factors are likely to be more important than labour market policies.

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Question 1: Do you agree that lower real wage growth was beneficial for employment levels during the Great Recession?

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Answer:
Neither agree nor disagree
Confidence level:
Extremely confident
Comment:
There are too many potential mechanisms here that we do not know enough about. Workers may well have 'priced themselves into jobs', but in doing so they may have reduced both aggregate demand and the incentive for firms to invest in more productive techniques. Productivity growth in the UK has been particularly poor compared to other countries, and while this has undoubtedly contributed to low real wage growth, causality may also go in the other direction as well.

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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