Question 3: Which would be the maximal public debt you would be willing to tolerate if used effectively (as in your answers to 1 and 2 above) to support an economic recovery?
Answer:
100% of GDP: Current policy
Confidence level:
Confident
Comment:
For a short time and if tax revenues return after the epidemic then it doesn't really matter about debt levels. This is an occasion where the current generation can borrow on future generations as they will shortly be the generation that also pays off debt.
Question 2: Which of the following would have the second greatest impact in mitigating the economic effects of the coronavirus economic crisis in the UK?
Answer:
Broad cash transfers and/or tax cuts
Confidence level:
Very confident
Comment:
see answer to question 1
Question 1: Which of the following would have the greatest impact in mitigating the economic effects of the coronavirus economic crisis?
Answer:
Government credit support for businesses
Confidence level:
Very confident
Comment:
As this is both a demand and supply shock both credit support for business and broad transfers to employed and unemployed are required.
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?
Although unemployment is little related to inflation, wage growth does contribute to inflation. But as wage growth is not the only, or recently even the main factor, affecting inflation, the monetary policy decision should not focus just on wage growth. As higher inflation will result in higher wage growth there may even be reverse causation. This suggests a more aggressive anti-inflation policy now rather than wait for wage growth as this will dampen any transmission from wage growth.
For many years the various versions of the Phillips curve have failed to capture a significant relation between inflation and unemployment, or even between wage inflation and labour market pressure. It is, and has been for many years, one of the weakest links in the New Keynesian models of the UK and US. It is interesting that the wage-price sector of the Smets-Wouters model is rejected even though this is one of the main things that they thought would result in an improvement over the price flexibility of New Classical models. A possible reason in the UK is that the relation is based primarily on demand effects whereas in recent years the labour market has been dominated by labour supply effects, namely, a large increase in the supply of (mainly unskilled) labour.
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).
Covid-19: Economic Policy Response
Question 3: Which would be the maximal public debt you would be willing to tolerate if used effectively (as in your answers to 1 and 2 above) to support an economic recovery?
Question 2: Which of the following would have the second greatest impact in mitigating the economic effects of the coronavirus economic crisis in the UK?
Question 1: Which of the following would have the greatest impact in mitigating the economic effects of the coronavirus economic crisis?
Labour Markets and Monetary Policy
======================================================================
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?
======================================================================
======================================================================
Question 1: Do you agree that a strong labour market is a good indicator of building inflationary pressure?
======================================================================
Pages