Ethan Ilzetzki's picture
Affiliation: 
London School of Economics

Voting history

Fiscal Rules in the European Monetary Union

Proposition 1: The existing fiscal rules for European Monetary Union members require revision.

Answer:
Agree
Confidence level:
Extremely confident

Asset Prices and Monetary Policy

Proposition 2: Asset prices and financial imbalances are best addressed using macroprudential tools and left out of the monetary policy decision making process.

 

Answer:
Strongly disagree
Confidence level:
Confident
Comment:
There is only so much that macroprudential tools can do and it is important to keep the door open to the "sledgehammer" of interest rate policy that might be needed to rein in financial excesses.

Proposition 1: The Bank of England’s mandate should be officially modified to take housing or other asset prices into account in its monetary policy decisions.

Answer:
Disagree
Confidence level:
Confident
Comment:
I don't think there is sufficient consensus on this topic to formalize this policy as a rule.

The “Spend Now, Tax Later” Budget

Question 3: Which of the following best characterizes the pace at which the budget addresses UK’s medium term fiscal challenges (deficit and debt)?

Answer:
Just right
Confidence level:
Confident
Comment:
I am not concerned about the levels of public debt, but certainly, the UK cannot borrow at the current rate forever and the OBR predicts some permanent damage to public finances. It was correct not to increase taxes in the upcoming two years and it is sensible to provide some clarity on the way the budgetary gap will be closed in the medium term. I put a high probability on further adjustments down the road as uncertainty abounds. But I do find it useful that the government has provided clarity on the types of measures it might take should deficit reduction prove desirable or necessary. On the measures themselves, I would have preferred to see more progressive tax measures on the personal income tax side.

Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?

Answer:
Moderately
Confidence level:
Not confident
Comment:
The super deduction will largely remove the cliff-edge created by the increase in corporate tax rates and may further accelerate investment in the short run. However, the corporate sector will exit the pandemic with substantial debt overhang and the question is whether more generous tax deductions for investment will be able to avert this drag on investment.

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