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

Voting history

Brexit: the potential of a financial catastrophe and long-term consequences for the UK financial sector

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Question 3: What do you think will be the overall economic consequences of Brexit for the UK?

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Answer:
Mildly negative
Confidence level:
Confident
Comment:
It is difficult to predict the future. I think that Brexit will be worse for the remaining countries than for the UK. It is exactly this negative impact on the EU that I think will be harmful for the UK. It will be much more beneficial for the UK if it can continue to influence the future of the EU even if it comes with some disadvantages.

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Question 2: What is the probability that the UK experiences such a significant disruption to financial markets and asset prices following a vote for Brexit on 23 June?

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Answer:
nontrivial but ≤ 10%
Confidence level:
Confident
Comment:
Given the uncertainty associated with a Brexit, financial markets are likely to display increased volatility. Although we can expect the financial sector to suffer some losses, I don't think they are that big that they will push us into another financial crisis. But financial markets are inherently fragile, and especially so during uncertain times, so we cannot exclude this possibility.

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Question 1: Do you agree that there would be substantial negative long-term consequences for the UK financial sector if the UK were to leave the EU?

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Answer:
Agree
Confidence level:
Confident
Comment:
Being isolated is not good for a financial centre. It seems evident that the UK financial sector will loose some Euro related business. There may be some offsetting positive effects (for example, if the continent imposes overly restrictive regulation), but I cannot see that these outweighs the cost.

The future role of (un)conventional unconventional monetary policy

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Question 2:  Do you agree that central banks should operationalise the use of these alternative tools of unconventional monetary policy for use either in the near term, or in the future, as economic conditions warrant?

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Answer:
Disagree
Confidence level:
Not confident
Comment:
It is not clear to me that achieving central banks' objectives will become more manageable with these quite revolutionary instruments. In fact, steering a ship in a storm may become more difficult when the captain has many controls and it becomes more difficult for the ship's sailors and other ships to understand what is going to happen.

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Question 1: Do you agree that central banks should continue to use the unconventional tools of monetary policy deployed in response to the global financial crisis as part of monetary policy under normal economic conditions?

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Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
I can imagine that there are situations under which it would make sense to use unconventional monetary policy under "normal" circumstances. For example, if the yield curve is quite steep and forward rates are inconsistent with the central bank's expectations. But there is a lot of value in monetary policy being transparent and predictable and this is easier if monetary policy is not too complicated.

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