Elias Papaioannou's picture
Affiliation: 
London Business School

Voting history

COVID-19 and UK Public Finances

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

Answer:
Higher inflation
Confidence level:
Confident

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

Answer:
There is no need to take or announce any budgetary actions to reduce the deficit or the public debt until the end of the pandemic
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:
140% of GDP (e.g. if fiscal support were trippled)
Confidence level:
Confident
Comment:
the interest costs for governments are quite long, both for short-term and long-dated bonds although yields may increase if governments massively expand their purcahses and implement tax cuts, such investments are likely yielding a higher return. Moreover in a period of plummeting trust to governments, corporations, democracy, and free-market institutions and rising populism, it is vital to show to people that their government is here to support them central banks QE policies can also help in this regard

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:
Making unemployment benefits more generous, streamlined, or comprehensive
Confidence level:
Confident
Comment:
- while the focus should be in keeping employment, it is unlikely that firms will not proceed to layoffs - it is needed, for both economic and moral reasons, to assist the unemployed - at the minimum unemployment benefits should be streamlined; coverage should be expanded and replacement rates should approach 90% as it is evident that neither the employees nor employers were responsible.

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:
Very confident
Comment:
- cash transfers to employees or alternatively to firms, with a scheme that they cover some modest percentage (10%-30% depending on sectors) - the government covers social security, health, and even pension contributions for the next 4 months, reducing firms' de facto burden - initiate infrastructure spending (US and Germany); though such government spending comes with delays it may help on expectations - major non-targetted corporate tax cuts unlikely to spur demand, but consider delaying tax payments - consider lowering tax rates for low-income and lower-middle-income households for the current and subsequent year

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