John VanReenen's picture
Affiliation: 
London School of Economics
Credentials: 
Professor of economics
Director of Centre for Economic Performance

Voting history

Deal or no deal: The Greece standoff

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Question 3: Do you agree that implementation of the agreement will lead to an expected decrease in Greek debt repayments?

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Answer:
Disagree
Confidence level:
Not confident
Comment:
Greek debt needs to be restructured as it is unsustainable. But it also needs structural on pensions, tax collection, flexibility in labour and product markets, etc.

Monetary policy and the zero lower bound (ZLB)

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Question 2: Do you agree that the benefits of reforming the monetary system to allow materially negative policy interest rates outweigh the possible costs?

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Answer:
Agree
Confidence level:
Not confident
Comment:
There needs to be the acceptance that there is a stronger role for fiscal policy when we are near the ZLB. We should also set a higher target rate of inflation at say 4%

The Importance of Elections for UK Economic Activity

Question 2: Do you agree that the outcome of the general election will have non-trivial consequences for aggregate economic activity (employment and GDP)?

Answer:
Agree
Confidence level:
Confident

Question 1: Do you agree that the austerity policies of the coalition government have had a positive effect on aggregate economic activity (employment and GDP) in the UK?

Answer:
Strongly Disagree
Confidence level:
Very confident
Comment:
UK GDP is about 15% below where we would have expected on pre-crisis trends. Employment rates back at pre-crisis levels at are 73%, but this is largely due to real wage falls of 8-10% - unprecedented in post-war recessions - which has kept labour costs low. As I discuss in my briefing paper http://cep.lse.ac.uk/pubs/download/EA020.pdf it is now clear that fiscal consolidation was introduced too early into the UK especially in the 2010-11 and 2011-12 period. The cut of public investment by 40% over this time period was the opposite of sensible macro-economics. The OBR estimate that UK GDP was reduced by 2% due to this austerity. This was bad enough, but is likely to be an underestimate of the economic damage as more recent econometric evidence by the IMF and (e.g.) Jorda and Taylor (2013) have found that fiscal multipliers are much higher in severe downturns when interest rates are at the zero lower bound. After 2011-12 austerity was relaxed as the nascent recovery stuttered, and this was correct. Had the Chancellor still tried to eliminate the deficit by the end of this Parliament as originally planned in his 2010 Budget, employment and GDP would be much lower. So the answer is that premature austerity has damaged UK welfare and as I and others argued at the time, delaying consolidation would have left the UK in a much stronger position than it is today. http://cep.lse.ac.uk/pubs/download/special/cepsp27.pdf We face the prospect of repeating this mistake over the next 5 years. Attempting to reach a surplus on the total budget deficit without any tax increases (as in the most recent Budget) implies cuts to public service spending (resource DEL) in 2016-17 and 2017-18 over over 5%: higher than anything else seen in the last parliament. It would be better to have a smoother path of adjustment (spending bounces back in 2019-20 on a "rollercoaster" as correctly described bu the OBR); to treat capital investment differently in the fiscal plan (in order to deal with the UK's long-term investment problems as highlighted by the LSE Growth Commission); and to mix tax rises with spending cuts in achieving balance on the current budget. See http://blogs.lse.ac.uk/politicsandpolicy/budget-2015-what-the-chancellor-did-and-didnt-say/ for my post-Budget analysis

Transparency and the Effectiveness of Monetary Policy following the Warsh Review at the Bank of England

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Question 2: Do you agree that the Bank's proposal to release the policy decision, MPC minutes and (once a quarter) the Inflation Report all at the same time justifies a change in the structure of MPC meetings from two consecutive days to a process in which in the MPC meetings are spread out over seven days?
 
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Answer:
Agree
Confidence level:
Not confident

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