Chryssi Giannitsarou's picture
Affiliation: 
University of Cambridge, Faculty of Economics
Credentials: 
Reader (Assoc. Professor) in Macroeconomics and Finance

Voting history

Will COVID-19 Cause Permanent Damage to the UK Economy?

Question 1: How quickly will the economy rebound (e.g. to the pre-pandemic trend) once the COVID-19 pandemic has been contained and absent major policy interventions? 

Answer:
Recovery will be slow (5-15 years)
Confidence level:
Not confident
Comment:
To a large extent, the time to recovery depends on how quickly the pandemic gets contained, i.e. what is the starting point of recovery. The longer it takes to contain the pandemic, the more difficult it will be to revert to the old ways, and there is a clear risk that demand patterns will change permanently (e.g. large parts of tourism, entertainment or air travel could disappear if say the pandemic lasts a few years). At the moment there is substantial uncertainty about when we can expect a vaccine to become commercially available, with estimates varying from 2 to 30 years (some even say we may never have one). Additionally, a great unknown about SARS-CoV-2 is whether immunity wanes over time, as is true for many related coronavira. In Giannitsarou, Kissler and Toxvaerd (2020) we show that if immunity wanes over time the disease becomes endemic, in which case it may be hard to talk about "return to normalcy". This scenario could have detrimental effects on the economy, and could even have permanent effects on economic growth.

COVID-19 and UK Public Finances

Question 2: What is the best way to (eventually) reduce public deficits and debt?

Answer:
Perpetuities
Confidence level:
Not confident
Comment:
Adding to this, I believe a balanced combination of higher inflation with perpetuities would probably work best.

Question 1: How urgently should the UK government address the rise in public debt?

Answer:
HM Treasury should present a long-term plan to reduce the deficit as soon as possible, but not introduce measures to do so in the upcoming budget
Confidence level:
Confident

Covid-19: Economic Policy Response

Question 3: Which would be the maximal public debt you would be willing to tolerate if used effectively (as in your answers to 1 and 2 above) to support an economic recovery?

Answer:
100% of GDP: Current policy
Confidence level:
Not confident

Question 2: Which of the following would have the second greatest impact in mitigating the economic effects of the coronavirus economic crisis in the UK?

Answer:
Government transfers to and bailouts of businesses
Confidence level:
Confident

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