Tony Yates's picture
Affiliation: 
University of Birmingham
Credentials: 
Professor of Economics

Voting history

Euro Area Deflation and Risk for UK Economy May 2014

Question 2

Do you agree that a deflation in the Euro area (as defined in Question 1) would pose a considerable risk to the UK recovery?

Answer:
Agree
Confidence level:
Confident
Comment:
Sustained deflation would probably be associated with a protracted period of weak demand, and therefore weak demand for UK exports. It may also mean a period of renewed heightened uncertainty about the ability of the ECB to hold the EZ together, and about the health of the EZ sovereigns and banking system. The latter could easily spark a renewed rise in spreads in UK risky assets, with all the consequences that that had last time for the UK economy returning again.

Prospects for Economic Growth in the UK April 2014

Question 2

Do you agree that, in the wake of the financial crisis, any downward adjustment to the expected average annual long-term growth rate of the UK economy is likely to be by less than 0.25 percentage points?

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
On the assumption that intermediary balance sheets are repaired, I see no reason why the long run growth rate should be any different in the future from the past. That's a big if.

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:
Not confident
Comment:
Defined as the difference between actual output and output under flexible prices, no, because if that were the case then inflation would be falling markedly. There's some evidence that it is falling a touch. But this is after five years of quite high inflation. Defined as the gap between actual output and output once the deleterious effects of the financial crisis has worked through: yes, output is probably substantially further below that. Recognising that the pre-crisis trend was probably distorted up by what proved to be unsustainably low spreads and high demand.

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:
Neither agree nor disagree
Confidence level:
Confident
Comment:
Seems odd to have confidence level and level of agreement. Anyway, I'm not convinced that such rules would leave enough freedom to deal with catastrophes, nor be workable, since the distinction between structural and cyclical is ambiguous, and could never be made both legally watertight and economically sensible. [Eg, we could tie the constitution to the hp filter of the deficit, but that would be daft.]

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:
Agree
Confidence level:
Confident
Comment:
60% was probably a good guess before the crisis. Since the crisis, we have upped our estimate of the frequency and cost of crises. I don't personally hold out that much hope that regulatory reform enacted will do a whole lot of good. That leaves me thinking we need to make more fiscal room for possible future bailouts, and extreme automatic stabiliser responses. However, we aren't going to be able to start down the road of getting to <60% any time soon.

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