Tony Yates's picture
Affiliation: 
University of Birmingham
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:
Confident
Comment:
I have blogged on this topic. I worry that devolution of tax and spending powers will i) inhibit risk sharing and ii) inhibit the ability of Federal fiscal policy to conduct counter-cyclical fiscal policy to smooth the business cycle, especially at the zero bound, and also to undertake extraordinary operations like bailing out the banks. The risk being that some areas may choose to tax and spend up to the maximum, leaving little further room to tap the tax base. And also that devolved borrowing that might follow from devolved tax powers would constrain borrowing capacity of the centre, and perhaps lead to tragedy of the commons problems.

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:
Neither agree nor disagree
Confidence level:
Confident
Comment:
Given the trajectory of inflation in say the US and the UK, one could make a case for mildly more stimulatory policy, but not much more. In the EZ things are much clearer that greatly more stimulatory fiscal and monetary policy should be implemented. Here I'm taking the trajectory of inflation relative to target as a rough proxy for whether, given the natural rate, policy is sufficiently stimulatory or not. That is not foolproof, and the models that would justify it beg many questions. But without them I would not know how to proceed.

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:
Neither agree nor disagree
Confidence level:
Confident
Comment:
I take secular stagnation to be, well, secular, ie relating to i) demographics, ii) some change in the rate of technical progress. I think the evidence is moot. For sure we have had a prolonged period where policies of maximal stimulus have struggled to generate a recovery, and keep inflation on track. But one could just as well account for this by the debt overhang created by the pre-crisis 'irrational exuberance', and the uncertainties injected by markets pondering how macroeconomic and regulatory policy will work out in the future. It's too early to tell, therefore!

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:
Disagree
Confidence level:
Not confident
Comment:
The steer we get from current literature on use of monetary policy and macro pru tools is that both should be used. Monetary policy is a weak and inefficient tool to quel a housing boom, but it would ideally tighten a little. I also think there are doubts, relative to these modelling studies, about the speed and efficacy with which macro pru standards can be changed from one period to the next, so monetary policy may have to fill in on that account, since speed and implementation are not issues.

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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:
Confident
Comment:
Yes. I think that the increment in risk this time, compared to previous times when we have seen comparable increases in house prices, is less, since standards have already tightened a lot [no more self-reporting income], and LTV ratios have fallen a lot too since before the crisis. But it seems that further action might be necessary.

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