David Cobham's picture
Affiliation: 
Heriot Watt University
Credentials: 
Professor of economics

Voting history

Monetary Policy and Inequality

Question 2: What role should inequality play in the monetary policy decisions (interest rate policy and quantitative easing)?

Answer:
Minimal role
Confidence level:
Confident
Comment:
While we would all like to see the end of exceptionally low interest rates and QE, it's far from obvious what the effect of moving quickly to such a world would be on inequality. The BoE could make a much more useful contribution by arguing in private and in public against the reintroduction of austerity on which part of the present government seems bent, since the short term and long term results of that would be unequivocally negative for equality.

Question 1: How large is the impact of monetary policy on the joint distribution of income and wealth?

Answer:
Small
Confidence level:
Confident
Comment:
Monetary policy has probably worsened inequality by raising (for a much longer period than had been expected back in 2009) the prices of unequally held assets, but it has probably reduced inequality (relative to some relevant counterfactual) by making the post-financial crisis recession less deep. But the main point has to be that the sources of the growing inequality of recent decades - a failure of and a stain upon democratic society and capitalist economy - lie elsewhere, in the increased imbalance of power in the labour market resulting mainly from changes in industrial structure, the suppression of trade unions and the perceived lack of any alternative economic/social model.

Central Bank Digital Currency for the UK

Question 2: What effect will the introduction of a CBDC have on UK banks?

Answer:
No or little effect
Confidence level:
Not confident
Comment:
Again, this assumes an 'indirect architecture'.

Question 1: How beneficial would it be to the UK economy for the Bank of England to introduce a central bank digital currency in some form in the upcoming decade?

 

Answer:
Neither beneficial nor harmful
Confidence level:
Not confident
Comment:
It all depends on the form in which the CBDC is introduced and operated, but I'm assuming an 'indirect architecture', in which case the effects would seem marginal in either direction.

Fiscal Rules in the European Monetary Union

Question 2: Which of the following is the one reform you would choose to improve fiscal rules?

Answer:
More flexible, countercyclical, or expenditure-based rules
Confidence level:
Confident
Comment:
What is crucial is (a) to facilitate countercyclical policies, in the form of discretionary changes as well as automatic stabilisers, in conditions of sharp deviations (in either direction) from trend/potential output, but also (b) to require consolidationary changes to return debt ratios to broadly appropriate levels when conditions have stabilised. The precise institutional form within which this is achieved is of secondary importance.

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