Wouter Den Haan's picture
Affiliation: 
London School of Economics
Credentials: 
Professor of economics

Voting history

House Prices and the UK economy

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Question 2: Do you agree that a more widespread weakening of the UK housing market will slow UK GDP growth significantly?

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Answer:
Disagree
Confidence level:
Not confident at all
Comment:
Since I don't expect house prices to drop a lot if they will fall, I also do not expect a big impact on the UK economy. But combined with Brexit uncertainty, falling house prices may negatively affect confidence substantially and then effects could be bigger. But I do not see this as a major risk factor.

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Question 1: Do you agree that the phenomenon of declining house prices will ripple out from the London property market leading more UK regions to experience falling prices?

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Answer:
Agree
Confidence level:
Not confident at all
Comment:
Predicting what is going to happen with house prices is very difficult. But with growth slowing down and the BoE beginning to start raising interest rates because of inflation it seems likely that house prices will stop increasing an falling prices seem more likely than increasing prices. I would be surprised though if they would fall a lot.

Global risks from rising debt and asset prices

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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?

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Answer:
Agree
Confidence level:
Confident
Comment:
Yes, but has been a side product of the stimulative monetary policy. And although there is definitely some risk associated with the remaining high leverage a more restrictive monetary policy would have been much worse in terms of its negative impact on economic activity.

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Question 1: Does the world economy face heightened risks arising from an excess of public and private debt and/or inflated asset prices?

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Answer:
Agree
Confidence level:
Confident
Comment:
Debt levels are still high, some asset prices (like house prices in some countries) may be inflated, and the financial regulatory system is still far from perfect. Moreover, there are several risk factors such as Brexit. Increased growth has made the world saver. But it makes perfect sense to remain very cautious.

Juncker's State of the Union Address

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Question 2: Do you agree that the euro has had more benefits than costs?

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Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
This is a difficult question for two reasons. First, one has to weigh benefits such as facilitating trade and financial flows against the costs such as loosing currency depreciation as a possiblity to improve competitiveness. I would put much emphasis on the latter because this cost can be more severe and serious economic costs for some outweighs some benefits for others. Second, we do not know the counterfactual. I would not be surprised that there also would be severe crises in the eurozone periphery countries without the euro. After all the euro was created because the alternatives are also problematic. Just imagine a situation in which the periphery countries have their own currency but cannot issue debt in their own currency when economic conditions deteriorate.

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