Monetary policy and the zero lower bound (ZLB)


Does monetary policy really face a zero lower bound or could policy rates be pushed materially below zero per cent? And would the benefits of reforms to achieve negative policy rates outweigh the costs? This column, which reports the views of the leading UK-based macroeconomists, suggests that there is no strong support for reforming the monetary system to allow policy rates to be set at negative levels.


Deal or no deal: The Greece standoff

Last week (week of June 22nd), the Greek authorities presented a new proposal to its creditors, consisting of increases in contributions to the government pension scheme,  a widening of the 23% VAT rate (but a reduced rate of 13% on energy, basic foods, catering and hotels), an increase in the corporate tax rate from 26% to 29%, an increase in the "solidarity" income tax rate that had been initiated under previous bailout programmes, and a reduction in defense spending.

The Importance of Elections for UK Economic Activity


In the week before the dissolution of Parliament, the Centre for Macroeconomics asked its panel of experts about the effects of governments on aggregate economic activity.

The great majority of respondents disagree with the proposition that the coalition government’s austerity policies have had a positive effect on aggregate economic activity. And an overwhelming majority of respondents agree that the outcome of the general election (assuming a stable government is formed) will have non-trivial consequences for economic activity.

2014 Autumn Statement


In the wake of the Chancellor’s Autumn Statement on Wednesday, the Centre for Macroeconomics (CFM) has conducted its monthly survey of leading UK-based macroeconomists.

The responses indicate overwhelming disagreement with the view that the scale of the planned reduction in total managed government expenditure is realistic. They also indicate disagreement with the view that observed shortfalls in tax receipts make a strong case for higher tax rates.