Costas Milas's picture
Affiliation: 
University of Liverpool
Credentials: 
Professor of Economics

Voting history

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:
No opinion
Confidence level:
Confident
Comment:
I wouldn't be comfortable to specify a 'debt ceiling'. The main point here is to make sure that enough is done to save lives, support the most vulnerable and those that will lose their jobs, for instance. The hope is that the shock will only be temporary so that debt will not have to climb wildly...

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 credit support for businesses
Confidence level:
Confident

Question 1: Which of the following would have the greatest impact in mitigating the economic effects of the coronavirus economic crisis?

Answer:
Broad cash transfers and/or tax cuts
Confidence level:
Confident
Comment:
Government spending. This is likely to be more effective than tax cuts in stimulating the economy in the short run. Co-ordination is important, as echoed by the head of the IMF, because countries trade with each other. If one does “enough” to restore its supply chain and demand but others don’t, we will all still be stuck with the problems in supply and demand that are driving the economy down. For instance, governments can support those who have lost their jobs or are quarantined. This is arguably more pressing in the UK, where unemployment benefits are much lower as a percentage of previous income than in the OECD average. Indeed, unemployment benefits account for 34% of previous income in the UK for the first 2 months as opposed to 64% for the OECD average (https://data.oecd.org/benwage/benefits-in-unemployment-share-of-previous-income.htm). Another good move would be to increase wages for those on the front line, such as nurses, whose starting salaries took a hit in real terms after the last financial crisis (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/819464/NHSPRB_2019_Report_Web_Accessible__1_.pdf).

The UK Productivity Puzzle

Question 2: Which of the following was the second most important cause for the slowdown in UK productivity growth?

Answer:
(Insufficient) investment in research and development
Confidence level:
Confident

Question 1: Which of the following was the most important cause for the slowdown in UK productivity growth?

Answer:
Low demand (including due to the financial crisis, austerity policies, or Brexit)
Confidence level:
Confident
Comment:
The hope is that productivity will grow stronger once the Brexit issue is settled. Trying to get a deal by the 31st of December might not be realistic though...

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