Proposition 2: Asset prices and financial imbalances are best addressed using macroprudential tools and left out of the monetary policy decision making process.
Answer:
Agree
Confidence level:
Very confident
Comment:
Monetary policy tools are less effective in addressing financial imbalances than macroprudential tools.
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:
Very confident
Comment:
The risk here is mission creep. Adding an explicit reference to house prices or asset prices in the mandate would make the Bank's policies less easy to understand and interpret, so I would avoid it. The Bank should certainly consider also asset prices in their decision making, insofar as they affect their objectives (inflation target, financial stability, etc...)
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:
Reduces deficits too rapidly
Confidence level:
Not confident
Comment:
The UK has a poor performance in terms of productivity compared to many advanced economies and it is also facing the Brexit shock. These factors could warrant fiscal stimulus for longer than what is implied in the current budget.
Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?
Answer:
Moderately
Confidence level:
Confident
Comment:
I agree with Martin Wolf and Peter Spencer, Paulo Santos Monteiro and Peter Smith. The super-deduction merely gives an incentive to bring investment forward, rather than postponing it in order to set the expense against the higher tax rate that is expected in 2023.
Question 1: How will the increase in the corporate tax rate from 19% to 25% affect the UK’s international competitiveness in the medium term?
Answer:
Moderate damage
Confidence level:
Confident
Comment:
I thought that lower corporate and personal income taxes would have been part of the UK government's strategy to reverse, to some extent, the damage inflicted by Brexit on the economy. The increase in corporate taxes would instead exacerbate the issues around international competitiveness created by Brexit. On the other hand, I guess it lends some credibility to the government's commitment to as much fiscal prudence as these unusual times permit, which could be beneficial by creating a more stable and certain economic environment in the future. On balance, these two effect could cause damage, but not necessarily very large.
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).
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.
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.
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)?
Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?
Question 1: How will the increase in the corporate tax rate from 19% to 25% affect the UK’s international competitiveness in the medium term?
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