Question 1: By how much would an immediate EU-wide import ban on Russian gas reduce German GDP growth per annum in 2022-3, in percentage points (pp), absent other policies?
Question 3: Relative to tax plans at the beginning of the year, the UK government should respond by:
Answer:
No change
Confidence level:
Very confident
Comment:
Let inflation increase revenues to support increased public spending. Households who pay most taxes can afford this. Households who can't afford this should be supported with increased public spending (see my response above).
Question 2: Relative to the public spending plans at the beginning of the year, the UK government should respond by:
Answer:
Increasing public spending in real terms
Confidence level:
Very confident
Comment:
The cost of living was increasing and living standards were set to decline even before the Russian invasion. This problem has two prongs, one is inflation etching away at households' savings (although also at their mortgages and other debts), the other is that real wages have been stagnant, even well before Covid-19. Redistributive fiscal policy that enhances the social safety net should be supported and increase in real terms. Other investments, such as infrastructure, should focus on productivity growth and increasing real wages in the longer run.
Question 1: Relative to the Bank of England’s planned trajectory for interest rates at the beginning of the year, the Bank should respond to geopolitical events by:
Answer:
Raising interest rates more rapidly
Confidence level:
Not confident
Comment:
The war shock will raise inflation and inflation expectations which should lead to a MODERATE increase in interest rates. This should be balanced against the fact that the war is primarily a supply shock and not due to an overheating economy. This recommendation is CONDITIONAL on the expansionary fiscal policy I recommend below, which should mitigate the social costs of the war shock on the UK economy.
Question 2: Will the inflation surge of 2021 prove persistent?
Answer:
No
Confidence level:
Not confident
Comment:
Barring new lethal waves of Covid 19 or other disasters, supply constraints should relax before the end of 2022. The Bank of England and now the Federal Reserve have indicated intentions to reign in inflation and I take them at their word.
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).
Effects of an embargo on Russian gas
Question 1: By how much would an immediate EU-wide import ban on Russian gas reduce German GDP growth per annum in 2022-3, in percentage points (pp), absent other policies?
The Impact of the Russian Invasion of Ukraine on the UK Economy
Question 3: Relative to tax plans at the beginning of the year, the UK government should respond by:
Question 2: Relative to the public spending plans at the beginning of the year, the UK government should respond by:
Question 1: Relative to the Bank of England’s planned trajectory for interest rates at the beginning of the year, the Bank should respond to geopolitical events by:
Surging Inflation in the UK
Question 2: Will the inflation surge of 2021 prove persistent?
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