Martin Ellison's picture
Affiliation: 
University of Oxford
Credentials: 
Professor of economics

Voting history

Towards a High-Wage, High-Productivity Economy

Question 2: What is your evaluation of the following statement: “A well-designed government-stipulated wage increase can lead to higher productivity”?

Answer:
Strongly disagree
Confidence level:
Very confident
Comment:
“Well-designed” is doing a lot of heavy lifting in the statement. It’s uncertain whether any government-stipulated wage increase can lead to higher productivity, however well designed, and it’s certain that any attempt to exploit such a possibility will be badly designed. We simply do not understand enough about how a government-mandated wage increase affects productivity to start exploiting that relationship.

Question 1: Which of the following statements most closely reflects your understanding of the relationship between productivity and wages.

Answer:
Wage increases cannot increase productivity in and of themselves
Confidence level:
Very confident
Comment:
It is difficult to see a compelling causal mechanism running from higher aggregate wages to higher productivity in the UK, when the converse is so obviously attractive. There are clever models in which low wages discourage effort (e.g. the effort of workers in their jobs or the efforts of employers to automate or invest in their workforce) but at the aggregate level these feel like exercises in “rationalising apparently puzzling behaviour” that economists are attracted to. Remember the largely now debunked “expansionary fiscal contractions”? Raising wages to improve productivity looks like falling into the fallacy of reverse causality. History is unlikely to look kindly on such initiatives.

Monetary Policy and Inequality

Question 2: What role should inequality play in the monetary policy decisions (interest rate policy and quantitative easing)?

Answer:
Minimal role
Confidence level:
Very confident

Question 1: How large is the impact of monetary policy on the joint distribution of income and wealth?

Answer:
Small
Confidence level:
Confident

Central Bank Digital Currency for the UK

Question 2: What effect will the introduction of a CBDC have on UK banks?

Answer:
No or little effect
Confidence level:
Confident
Comment:
Outside of a financial crisis, there is limited appetite to “rock the boat” with financial innovation. This means that the role of a newly-launched central bank digital currency will, by design, likely to be limited. Radical proposals are unlikely to fly, so it is difficult to see sufficient disruption to upend 800 years of traditional banking.

Pages