Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?
Answer:
Moderately
Confidence level:
Confident
Comment:
There will be some effect as investment plans are brought forward, but there’s a feeling of “rearranging the deckchairs on the Titanic”. It may be that bringing investment forward uses up investment opportunities from the future. Summers (2017) (https://www.journals.uchicago.edu/doi/pdf/10.1086/690245) seems to be making this argument when he says “[t]o some extent, low rates work to stimulate demand by pulling investment forward. So today’s reduction in interest rates reduces tomorrow ‘s neutral rate by pulling forward investment”. It suggests that the super reduction may reduce R* in the future.
Question 1: How will the increase in the corporate tax rate from 19% to 25% affect the UK’s international competitiveness in the medium term?
Answer:
Moderate damage
Confidence level:
Confident
Comment:
International competitiveness rests on many factors, only one of which is the corporate tax rates. There may be some negative signalling (“Britain is not open for business”) that contributes to the post-Brexit malaise. More importantly, the small yield of corporate taxes means the proposed change will only have a minor impact on fiscal sustainability.
Question 3: Which of the following best characterizes the pace at which the budget addresses UK’s medium term fiscal challenges (deficit and debt)?
Answer:
Just right
Confidence level:
Confident
Comment:
To borrow terminology from epidemiologists, for the debt to GDP ratio to fall it needs its R number to be below 1. This can be done by running budget surpluses or through nominal GDP growth. The OBR forecast a gradual decline in the debt to GDP ratio before the pandemic in March 2020 (so at the time R<1), and I see little reason why we would not return to R<1 once tax receipts rebound alongside GDP and acute health spending on the pandemic subsides. Nominal GDP will gradually chip away at the debt to GDP ratio so there is no pressing need to run large budget surpluses.
Question 2: Would you support changing the ECB’s mandate to incorporate the EU’s target of carbon neutrality by 2050, if such a change is deemed legally necessary to adopt your preferred approach?
Answer:
No
Confidence level:
Very confident
Question 1: Which of the following actions is the most advisable approach for European Central Bank to address the environmental impact of its bond-purchasing policies?
The CFM surveys informs the public about the views held by prominent economists based in Europe on important macroeconomic and public policy questions. Some surveys focus specifically on the UK economy (as the CFM is a UK research centre), but surveys can in principle focus on any macroeconomic question for any region. The surveys shed light on the extent to which there is agreement or disagreement among these experts. An important motivation for the survey is to give a more comprehensive overview of the beliefs held by economists and in particular to include the views of those economists whose opinions are not frequently heard in public debates.
Questions mainly focus on macroeconomic and public policy topics. Although there are some questions that focus specifically on the UK economy, the setup of the survey is much broader and considers questions related to other countries/regions and also considers questions not tied to a specific economy.
The surveys are done in collaboration with the Centre for Economic Policy Research (CEPR).
The “Spend Now, Tax Later” Budget
Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?
Question 1: How will the increase in the corporate tax rate from 19% to 25% affect the UK’s international competitiveness in the medium term?
Question 3: Which of the following best characterizes the pace at which the budget addresses UK’s medium term fiscal challenges (deficit and debt)?
The ECB’s Green Agenda
Question 2: Would you support changing the ECB’s mandate to incorporate the EU’s target of carbon neutrality by 2050, if such a change is deemed legally necessary to adopt your preferred approach?
Question 1: Which of the following actions is the most advisable approach for European Central Bank to address the environmental impact of its bond-purchasing policies?
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