Question 1: Do you agree that the phenomenon of declining house prices will ripple out from the London property market leading more UK regions to experience falling prices?
Historically there’s not much evidence that house price developments in London lead those in the rest of the country. Calculations with quarterly Nationwide data from 1973-2017 show that house prices in the regions are slightly at predicting future London house prices than London prices are at predicting future house prices in the regions. The elephant in the room is Brexit and whether London is first in the queue to feel the effects, although the -5.1% fall in London house prices seen in the immediate aftermath of Black Wednesday 1992Q4 failed to ripple out in any meaningful way.
Whilst loose monetary policy has contributed to increased leverage and asset prices, if there are problems here then it is up to macroprudential policy to sort it out. I've never been very convinced with the "too low for too long" argument - we need to use macroprudential policy to build a stable financial architecture that doesn't explode or implode whenever the markets think monetary policy is off kilter. It's time for macropru to step up to the plate.
The European Union as a whole has been a success, especially thinking about the single market. Adopting the Euro has probably contributed a fair bit towards that, although it’s difficult to construct the counterfactual. We economists have certainly learned a lot about the problems of running a monetary union since 1999 though!
In economics we typically want to make something compulsory if there is a clear market failure, for example in moral hazard or hidden information settings – think of the economic arguments around Obamacare. I don’t see what the market failure is here that would need such compulsion. Shouldn’t the benefits of a monetary union be sufficient to ensure that countries like Sweden and Poland join willingly? Another issue is timing. The Euro Area is only just emerging from majorly turbulent times, so it would make sense to take stock and consolidate before leaping into an unknown expansion that could well rattle markets.
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).
House Prices and the UK economy
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Question 1: Do you agree that the phenomenon of declining house prices will ripple out from the London property market leading more UK regions to experience falling prices?
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Global risks from rising debt and asset prices
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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?
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Question 1: Does the world economy face heightened risks arising from an excess of public and private debt and/or inflated asset prices?
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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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Question 1; Do you agree that euro membership should be compulsory for all EU member states?
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