Sir Charles Bean's picture
Affiliation: 
London School of Economics
Credentials: 
MA Cambridge
PhD MIT

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:
Disagree
Confidence level:
Confident
Comment:
Measures of happiness or well-being certainly may have value in considering the design of microeconomic policy interventions (and here I favour a 'scorecard' approach rather than combining several indicators into an arbitrary single aggregate). But I don't think they are likely to add much value in informing the design of monetary policy or the overall stance of fiscal policy.

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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:
Disagree
Confidence level:
Confident
Comment:
While GDP has considerable limitations - and is certainly not satisfactory as a measure of welfare - we are a long way off having a measure of happiness or well-being that is widely accepted and sufficiently reliable to base macroeconomic analysis around. Of course, that doesn't mean we shouldn't undertake further research in order to get a better understanding as what drives such measures.

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:
Disagree
Confidence level:
Confident
Comment:
I don't believe that it "masks" the structural problems - they are still perfectly evident - though it certainly reduces the pressure on national governments to address them. However, the ECB would be straying beyond its legal mandate were it to deliberately underachieve on its inflation objective in order to place more pressure on member states to undertake the necessary reforms. Such behaviour by the ECB would lack democratic legitimacy.

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Question 1: Do you agree that exceptionally loose monetary policy by the European Central Bank is no longer appropriate?

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Answer:
Disagree
Confidence level:
Confident
Comment:
While the euro area's primary economic problems can only be addressed with structural reforms, there is still spare capacity, as evidenced by the elevated level of unemployment and persistently weak underlying inflation. Given that, the ECB's policy stance seems to me to be entirely warranted (though I would prefer to see more of the burden in sustaining aggregate demand being shouldered by fiscal policy, especially in Germany).

German current account surpluses

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Question 2: Do you agree that the German government should increase public spending given its persistently large current account surplus and given that it is part of the Eurozone?

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Answer:
Agree
Confidence level:
Confident
Comment:
I believe that there are very good grounds for a German fiscal expansion at the current juncture. The euro-area fiscal rules are asymmetric in forcing high-deficit countries to consolidate, but there is no countervailing pressure on the low-deficit/surplus countries in the other direction. As a result there is a deflationary bias in the area as a whole. In normal circumstances, the ECB would be able to offset that deflationary bias, but it is much harder at the present juncture where policy rates are at, or near, their lower bound. The one rub I would add is that the stimulus need not come entirely through extra public spending (though the state of German infrastructure would warrant that). It can also come through fiscal incentives and structural changes that encourage higher private consumption and investment.

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