Sir Christopher Pissarides's picture
Affiliation: 
London School of Economics
Credentials: 
Professor of economics

Voting history

Devolving Income Tax Powers within the UK

Question 1: Do you agree that the economic benefits of devolving full income tax powers to the Scottish Parliament and Welsh Assembly outweigh the possible costs?

Answer:
Disagree
Confidence level:
Extremely confident
Comment:
Although there are some benefits like accounting for local preferences and containing the size of government in London, the costs of possible (if not likely) tax competition between the component parts of the UK far outweigh them. Think for example about location of industry and individuals and where they pay taxes. Will Scottish income be regarded as foreign income in England for tax purposes? The accounting difficulties that this will generate will be a nightmare

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 Disagree
Confidence level:
Confident
Comment:
Especially in Europe, where because of the inability of the ECB to act to raise inflation to its target of 2% fiscal policy needs to be more expansionary to offset the deflationary impact of the monetary policy. Structural reforms take long to have positive effects. Eventually they will get us there but there is no reason to waste so much output in the meantime. More expansionary fiscal policy until recovery comes will speed up the time that structural policies need to have an effect

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:
Extremely confident
Comment:
The United States is recovering well from the recession and it will experience above trend growth. This alone says that the western economies have not entered stagnation because the major economy is growing again. I agree that in stagnation the real interest rate needs to be negative - or some other incentive needs to stimulate investment. The US Federal Reserve has made sure that this has not happened. The UK is also not entering stagnation. Although its recovery was rather slow because of too much fiscal restraint in the depths of recession it is again recovering. But I am concerned about the Eurozone and the German insistence that one size (the German one) fits all. This might cause prolonged stagnation in the area as a whole, as prices are not allowed to rise to the ECB targets

UK House Prices and Macro-Prudential Policy July 2014

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Question 2: When housing-related risk is deemed excessive from the viewpoint of financial stability, do you agree that the correct response is to deploy macro-prudential tools, leaving interest rates focused on the needs of inflation and aggregate real activity?

 
Answer:
Strongly Agree
Confidence level:
Extremely confident
Comment:
Interest rate changes have large impact on the prices of other assets, many more productive than the housing stock and on the value of sterling and they are read as giving signals of future macro policy. A single market, even one as important as the housing market, should not be allowed to dictate policy vis-à-vis this important policy tool.

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Question 1: Do you agree it is time for more robust policy action to prevent a build-up of excessive housing-related risk?

 

 
Answer:
Agree
Confidence level:
Extremely confident
Comment:
A lot of the new demand must be foreign cash buyers (e.g., large increase in prices and transactions mainly in London and small increase in debt) and this type of demand is volatile. It could cause large fluctuations in the housing market and in monetary policy that can have harmful effects on UK residents and on UK macro stability

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