Wendy Carlin's picture
Affiliation: 
University College London
Credentials: 
Professor of economics

Voting history

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:
Disagree
Confidence level:
Not confident
Comment:
The exit of an economy from a financial crisis is not well understood (the cases of Japan and Sweden in the 1990s provide strongly contrasting examples - and there was not the complication of global effects at that time). The recent UK recovery is unbalanced but we have seen unbalanced growth continue for many years before.

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:
Neither agree nor disagree
Confidence level:
Confident
Comment:
I remain puzzled by the productivity performance and wage behaviour of the UK economy over the past 5 years, which makes it difficult to take a strong view about the size of the output gap.

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:
Unless crises of the kind recently experienced can be ruled out, this is not a sensible approach. A common approach to balanced budget rules across countries with different exchange rate regimes and with different wage setting institutions (which may provide scope for internal devaluation as a substitute for fiscal policy in stabilization) is not appropriate.

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:
Naming a target is an aspiration that is not very meaningful. Moreover it provides no guidance on the transition from where the economy is now to such a target. Better is to focus attention on the elements of a prudent fiscal policy, which ensures long run sustainability of the public finances, and allows for stabilization when necessary.

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