Simon Wren-Lewis's picture
Affiliation: 
University of Oxford
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 disagree
Confidence level:
Very confident
Comment:
I assume by 'normal times' you mean that short rates are not at or near their lower bound. In which case you have one instrument, nominal short rates, which dominate the other (QE) in terms of predictability and effectiveness. There is therefore no reason to use the inferior instrument.

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:
Confident

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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 at all
Comment:
I suspect that it will lead to significant reductions in employment in the residential care sector, because here the scope for squeezing profits is small and the government partly fixes the price. That implies, of course, that falls in employment could be avoided if the government was not so fixated by the deficit.

Autumn Statement & Charter for Budgetary Responsibility

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Question 2: Do you agree that the Charter for Budgetary Responsibility is helpful in underpinning the credibility of fiscal policy?

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Answer:
Strongly Disagree
Confidence level:
Extremely confident
Comment:
I think fiscal rules, backed by an independent watchdog with a wider mandate than the current OBR, are a good idea. The problem with the fiscal charter is that it is a very bad fiscal rule. Fiscal aggregates are subject to all kinds of shocks beyond the economic cycle, Trying to achieve a surplus each year will therefore lead to costly volatility in taxes or spending, just as having to reach an inflation target each year would lead to damaging volatility in interest rates. The target is also asymmetric in a cyclical sense, and so puts no pressure on governments to reduce debt more rapidly in boom years.

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Question 1: The Chancellor forecasts a cyclically adjusted fiscal surplus by 2017-18 and in cash terms by 2019-20. Do you agree that this planned path of fiscal consolidation is appropriate?

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Answer:
Strongly Disagree
Confidence level:
Extremely confident
Comment:
A period of low interest rates and low real wages are a time to substantially increase public investment, yet this is precluded by the aim to achieve surplus by 2019. Such a sharp fiscal consolidation while interest rates remain so low is also risky: if the UK is hit by an unexpected negative shock, monetary policy has little scope to counteract the shock. While a policy to reduce the debt to GDP ratio over the long term is sensible, any deficit under 3% will do this. Continued surpluses will put all the burden of adjustment on the current generation.

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