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

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:
Not confident
Comment:
If the Eurozone takes a mature view, and agrees to negotiate with Greece, the outcome will be beneficial for both Greece and the Eurozone as a whole. There are no necessary implications for other countries. After all, Greece has had the terms of its debt adjusted before and no changes have been made elsewhere. There are two reasons why I am not confident about this view. First, I am not confident that the Eurozone will be mature about this. It may try to play what is a very weak hand (in contrast Greece has a strong hand) and make all kinds of silly threats, which will only do the Eurozone harm. Second, other countries may be encouraged to seek debt relief. They have every right to do so. Now of course that raises risk premiums, but that is all part of the calculation that each government has to make.

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:
Disagree
Confidence level:
Confident
Comment:
The economy is still in an unusual situation, with real wages very depressed. I still hope that is temporary.

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

Answer:
Disagree
Confidence level:
Very confident
Comment:
But the danger is that Osborne may nevertheless try to achieve it. As a political strategy, sharp cuts in the first 2 or 3 years of an administration, followed by easing off before the election, will have appeared to work if he is still in charge.

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:
Extremely confident
Comment:
An unusual degree of fiscal contraction has caused a slow recovery in the US, a delayed recovery in the UK, and a second recession in the Eurozone. This is all unnecessary and damaging, and so should be reversed, whether we have secular stagnation or not.

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:
Disagree
Confidence level:
Not confident
Comment:
The empirical evidence that there has been a fall in the 'natural' real interest rate since the 1980s is pretty clear. Whether it has fallen to some negative number is much less clear. Our current problems with nominal rates staying at the zero lower bound may reflect a small but positive natural real rate coupled with a degree of fiscal contraction that is quite unusual during the recovery stage of a recession. I've also found the theoretical explanations so far offered unconvincing.

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