Francesca Monti's picture
Affiliation: 
Kings College London

Voting history

Lockdowns and UK Economic Performance

Question 3: Using not only the policy tools that have been part of the UK policy mix thus far but also policy tools implemented in other countries, to what extent does the government face a tradeoff between saving lives and preserving livelihoods? 

Answer:
Small tradeoff
Confidence level:
Not confident

Question 2: How much will the new lockdown measures introduced on Thursday November 5 hurt UK economic activity this year relative to a counterfactual with the milder measures adopted over the summer?

Answer:
No additional damage or benefit
Confidence level:
Not confident

Question 1: How much of the decline in GDP experienced to date would have been avoided in the absence of any lockdown measures or other policy interventions (such as fiscal support)?

Answer:
GDP would have been lower absent lockdowns
Confidence level:
Not confident
Comment:
Historical evidence and insights from models would suggest that the health-economy trade-off is far from clear cut. For example, Correia, Luck and Verner (2020), using regional data from the 1918 Flu Pandemic, find that social distancing measures did not seem to worsen the downturn: to the contrary, evidence on manufacturing activity and bank assets suggests that the economy performed better after the pandemic in areas with more aggressive public health policies. The reason is that, even if the restrictions depress economic activity when they are in place, such measures can mitigate the most severe and persistent economic disruptions, by reducing the severity of the pandemic. Many models (e.g. Bodenstein, Corsetti and Guerrieri, 2020, among others) have results in line with the evidence above.

Should the ECB Reformulate its Inflation Objective?

Question 3: Which of the following best reflects your opinion on the following statement? “The ECB should explicitly recognize unemployment and/or economic growth as a secondary aim, secondary to its price stability mandate.”

Answer:
Agree
Confidence level:
Confident

Question 2: Would you support increasing the ECB’s inflation target to a higher rate of inflation than the current 2% target?

Answer:
Support
Confidence level:
Confident
Comment:
The question is whether the benefits brought about by a higher inflation target are bigger than the costs of having higher inflation in normal times. But while the costs of inflation are still very debated (e.g. see Nakamura et. al QJE 2018), the advantages of a higher inflation target in a world of lower interest rates are more clear, specifically the ability to operate with conventional policy tools when faced with a downturn. What is more difficult to assess is whether such a change in strategy could be credibly implemented and would be well understood by the actors in the economy.

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