Jumana Saleheen's picture
Affiliation: 
CRU Group
Credentials: 
Chief Economist

Voting history

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:
Strongly agree
Confidence level:
Extremely confident
Comment:
The EU is a large open economy, with a flexible exchange rate. That means that in response to a negative demand shock, one might see a negative output gap with no weakness in inflation. This arises because of a fall in the exchange rate (in response to the demand shock), which in turn pushes up on import prices and headline inflation rates. It is for this reason that standard RBC models (e.g. Clarida, R, J Gali and M Gertler (1999)) include a traditional Taylor Rule - where optimal policy is determined by the neutral rate of interest and the deviation of inflation from target, and the deviation of output from potential (the output gap).

The Economic Cost of School Closures

Question 3: To what extent will school closures increase gender inequality due to unequal gender distribution of the burden of school closures?

Answer:
To a small degree and temporarily
Confidence level:
Confident
Comment:
There is no doubt that school closures have increased gender inequality. Anecdotal evidence from the recent period is that children are more likely to interrupt their mothers on a zoom call than they are to interrupt their fathers. It is unclear what is the source of this difference, and how much lies on the parent’s behaviours (e.g. maternal instinct) and how much is it due to the child’s behaviour (go to the person who is most likely to help). But I think the impact here will be more temporary than persistent, as and when we return to normal life.

Question 2: To what extent will school closures increase inequality in human capital development?

Answer:
To a small degree but persistently
Confidence level:
Confident
Comment:
School closures will impact some children more than others, and therefore increase inequality in education in the short-term and longer-term. Children taking national exams next year (GCSE and A ‘levels) are most vulnerable. Younger children will be less affected as have more time to ‘catch-up’. Children from private schools are less vulnerable, as fee-paying schools have provided a full day of online schooling, starting from assembly to lessons throughout the day. They have provided ample interaction with teachers and other students. That has not been the case in state schools. Here work has been set online but left to children to complete, making support from parents crucial. Anecdote suggests that that support has varied by parental education and income, with those at the upper end providing more support. Academic evidence finds strong feedback loops in educational attainment - good teaching improves educational outcomes, which in turn gives rise to more opportunities. School closures of 4 months are sufficient to have a persistent impact on educational inequality.

Question 1:What damage will school closures have on economic growth over a 10-15 year horizon?

Answer:
Minor
Confidence level:
Confident
Comment:
I think 10-15 year is a long enough time horizon for any adverse impact of temporary school closures on human capital, and aggregate economic growth to be made up. That said if there are repeated school closures over an extended period of time (say 12-18 months), the impact could be larger.

Will COVID-19 Cause Permanent Damage to the UK Economy?

Question 2: Which aspect of the economy poses the greatest risk for a slow recovery?

Answer:
None of the above, other, or no opinion
Confidence level:
Confident
Comment:
Since this is a health crisis the most important policy is to tackle the virus. That failing (as track and trace has done so far), the government should support changes that allow the economy to operate well in a socially distanced way. As the economy opens up, people are keen to return to normal. They want to be able to earn money and spend it. But the virus creates actual and perceived (fear) difficulties in achieving that in certain sectors where social distancing is a challenge – hospitality, retail, and leisure. The best policy in this situation is for the government to provide funds to control the virus; but also provide support that helps us live with the virus. To do this the government should support firms and workers in the most affected sectors (pubs, restaurants, and cinemas) to transition to a world in which they can provide their services, in a socially distanced way. To support the return of the relevant workers back to work, government’s may also need to up their support of online schooling (should it be needed). This wider scope of support will benefit the labour market, firms, and society.

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