Michael Wickens's picture
Affiliation: 
Cardiff Business School & University of York
Credentials: 
Professor of economics

Voting history

The Eurozone COVID-19 Crisis: EU Policy Options

Question 1: What is the total size of funding that you would advocate at the EU level in support of its members to weather the COVID-19 crisis this year?

 

 

Answer:
No opinion
Confidence level:
Confident
Comment:
This is not the right question. It presupposes that direct fiscal funding is required which it is not. I explain my reasoning in the next question.

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?

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.

Labour Markets and Monetary Policy

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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?

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Answer:
Disagree
Confidence level:
Confident
Comment:
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.

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