The long period of slow or negative growth might imply that there is a substantial output gap in the UK economy. Do you agree that there is currently a larger output gap than the OBR estimate to the extent that the shortfall in output relative to capacity is 3% or greater?
Answer:
Disagree
Confidence level:
Not confident
Comment:
One would hope to get a fairly reliable answer to the question by looking at the historical performance of the UK economy over 1830-2013 (data from the "correct" excel file of Reinhart and Rogoff). To this end, I pool together information from different filters. I proxy the output gap by the median and/or the average of (i) the output gap using a Hodrick-Prescott trend, (ii) the output gap using a cubic trend and (iii) the output gap using the full sample asymmetric Christiano-Fitzgerald (2003) filter. From 1955 onwards, I also include (in the median/mean) the OBR output gap measure. For 2013, the median output gap is estimated at -0.5%; the average output gap is estimated at -4.7%. In my view, this big difference flags the difficulty in answering the question even by digging deep into the history...
To help ensure that advanced country governments pursue responsible fiscal policies, countries should adopt formal rules for limiting structural deficits, which are supported by primary legislation or constitutional reform.
Answer:
Strongly Agree
Confidence level:
Very confident
First question:
To help ensure that advanced country governments have sufficient flexibility to respond to future crises, it is important that finance ministries aim for a ratio of public debt to GDP that is substantially less than 60% in normal times.
The CFM surveys informs the public about the views held by prominent economists based in Europe on important macroeconomic and public policy questions. Some surveys focus specifically on the UK economy (as the CFM is a UK research centre), but surveys can in principle focus on any macroeconomic question for any region. The surveys shed light on the extent to which there is agreement or disagreement among these experts. An important motivation for the survey is to give a more comprehensive overview of the beliefs held by economists and in particular to include the views of those economists whose opinions are not frequently heard in public debates.
Questions mainly focus on macroeconomic and public policy topics. Although there are some questions that focus specifically on the UK economy, the setup of the survey is much broader and considers questions related to other countries/regions and also considers questions not tied to a specific economy.
The surveys are done in collaboration with the Centre for Economic Policy Research (CEPR).
Prospects for Economic Growth in the UK April 2014
Question 1
The long period of slow or negative growth might imply that there is a substantial output gap in the UK economy. Do you agree that there is currently a larger output gap than the OBR estimate to the extent that the shortfall in output relative to capacity is 3% or greater?
Responsible long-term fiscal policy (pilot survey)
Second question:
To help ensure that advanced country governments pursue responsible fiscal policies, countries should adopt formal rules for limiting structural deficits, which are supported by primary legislation or constitutional reform.
First question:
To help ensure that advanced country governments have sufficient flexibility to respond to future crises, it is important that finance ministries aim for a ratio of public debt to GDP that is substantially less than 60% in normal times.
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