Joseph Pearlman's picture
Affiliation: 
City University London
Credentials: 
Professor of Economics

Voting history

Labour Markets and Monetary Policy

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Question 2: Do you agree that, in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy makers can afford to wait for greater certainty about real wage developments and building inflationary pressure before raising interest rates?

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Answer:
Agree
Confidence level:
Not confident
Comment:
Although I agree that one should wait for more certainty about wage growth before raising interest rates, I am not convinced that this is the best thing for the country. With TFP growth particularly low, it is highly likely that we need poorly performing firms to drop out of the market, and they will only do so once their rates of return are below the interest rate. So it is possible that an increase in interest rates would benefit the country even if it led to a temporary loss of jobs.

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Question 1: Do you agree that a strong labour market is a good indicator of building inflationary pressure?

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Answer:
Disagree
Confidence level:
Very confident
Comment:
Trade unions now have a far smaller membership than 40 years ago, making it much more difficult for them to influence wages as significantly as in the pre-Thatcher era. I am not convinced about the influence of the global marketplace; we are only now back again at the same level of trade/GDP as we were in 1914, and that did not then prevent trade unions putting upward pressure on wages. Evidence from migration research indicates little downward effect on wages apart from at the very lowest incomes. Central banks may anchor expectations of inflation but if inflation goes up significantly, then wages will follow. So the emasculation of trade unions is what I believe counts the most.

Juncker's State of the Union Address

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Question 2: Do you agree that the euro has had more benefits than costs?

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Answer:
Neither agree nor disagree
Confidence level:
Very confident
Comment:
Transactions costs have obviously been lower, but one interest rate for all is never going to be ideal unless, as in the US, there is fiscal federalism.

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Question 1; Do you agree that euro membership should be compulsory for all EU member states?

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Answer:
Strongly disagree
Confidence level:
Very confident
Comment:
The UK's experience of not being a member of the euro while being in the EU was very positive. From a different perspective, Greece might well have benefited from still having the drachma, while being part of the EU.

Wages and economic recoveries

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Question 1: Do you agree that lower real wage growth was beneficial for employment levels during the Great Recession?

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Answer:
Agree
Confidence level:
Extremely confident
Comment:
Lowered real wage growth is almost inevitable in a recession, and in principle should act as an automatic stabilizer to bring the level of employment up to its pre-crisis level.

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