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

Voting history

Towards a High-Wage, High-Productivity Economy

Question 2: What is your evaluation of the following statement: “A well-designed government-stipulated wage increase can lead to higher productivity”?

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
The design would have to cover infrastructure and training, and that’s not straightforward. But if the government really wanted to reduce poverty and inequality, it could require wage increases at the lower end of the scale which - because most such workers are in the non-tradables sector – would lead mainly to higher prices paid by the better off, and those higher prices could be sold politically as the quid pro quo for living in a more civilised society with less poverty and less inequality.

Question 1: Which of the following statements most closely reflects your understanding of the relationship between productivity and wages.

Answer:
Wage increases can in some cases increase long-run productivity
Confidence level:
Confident
Comment:
If but only if they lead to greater investment in machinery and equipment, and are accompanied by rises in skills. But note that UK government efforts of different kinds to increase economic growth - which go back at least to the 1960s - have not typically been very effective: what really matters is total factor productivity growth, and that's the bit of growth which we really do not understand well. Good access to a large market would also help (and there’s some evidence of higher growth in the UK when it was in the Common Market/EU).

Post-Covid Fiscal Rules for the UK

Question 3: Which of the following variables should fiscal rules target to best improve the performance of the UK macroeconomic policy going forward.

Answer:
No explicit target
Confidence level:
Confident
Comment:
Discretion rules (okay).

Question 2: What impact has the sequence of fiscal rules adopted in the UK since 1997 had on the conduct of fiscal policy in the UK?

Answer:
Neither improved nor harmed
Confidence level:
Confident
Comment:
See comment on question 1.

Question 1:  What impact has the sequence of fiscal rules adopted in the UK since 1997 had on the level of UK public debt? 

Answer:
No impact
Confidence level:
Confident
Comment:
It's possible that Gordon Brown made some decisions in response to his previously announced rule, but for subsequent chancellors it seems more likely that the rules were just public relations (Brown had a rule, Osborne had to have one too, but Osborne's fiscal decisions were made on other bases...).

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