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

Voting history

Prospects for Economic Growth in the UK April 2014

Question 1

The long period of slow or negative growth might imply that there is a substantial output gap in the UK economy.  Do you agree that there is currently a larger output gap than the OBR estimate to the extent that the shortfall in output relative to capacity is 3% or greater?  

Answer:
Disagree
Confidence level:
Very confident
Comment:
The only satisfactory definition of an output gap in my view is one that gives the percentage by which output could rise without creating bottlenecks that could lead to inflation. In light of that if, for example, the recession led to lower investment rates, the output gap that could be closed without inflation risks is less that the gap between current output and trend. I suspect the OBR fear that a rise in output by more than 1.7% would lead to bottlenecks and I sympathise with that view.

Responsible long-term fiscal policy (pilot survey)

Second question:

To help ensure that advanced country governments pursue responsible fiscal policies, countries should adopt formal rules for limiting structural deficits, which are supported by primary legislation or constitutional reform.

Answer:
Disagree
Confidence level:
Confident
Comment:
Having formal rules prohibiting structural deficits would be too rigid. I support balanced structural budgets but given the difficulty of defining the structural deficit and the need for more flexibility sometimes I am against making this a legal requirement

First question:

To help ensure that advanced country governments have sufficient flexibility to respond to future crises, it is important that finance ministries aim for a ratio of public debt to GDP that is substantially less than 60% in normal times.

Answer:
Disagree
Confidence level:
Confident
Comment:
A lower debt than the 60% threshold would not be bad but the transition to it will be bad. So although I support zero deficits in good times (which would reduce the debt/GDP ratio) I do not support large surpluses that will bring the ratio of high-debtors below 60%

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