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

Voting history

Monetary policy and the zero lower bound (ZLB)

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Question 2: Do you agree that the benefits of reforming the monetary system to allow materially negative policy interest rates outweigh the possible costs?

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Answer:
Disagree
Confidence level:
Confident
Comment:
I don't see why the monetary system needs to be reformed to allow negative nominal rates, especially as they are likely to be a short-term measure. They are, however, of very doubtful effectiveness and are unlikely to offset the costs of the distortions they bring to financial markets and savers. If the market chooses negative rates then so be it. Otherwise I would avoid them as a policy measure. The problem is that a hysteresis effect has developed in which the precise level of interest rates is probably of far less importance than the signal that even a small rise in interest rates would give. As a result monetary policy in the UK is paralysed.

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Question 1: Do you agree that it is feasible for the UK authorities to change the monetary system so that materially negative policy interest rates could be safely implemented? (In answering, you may wish to explain your reasons and define your view of 'material')

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Answer:
Agree
Confidence level:
Extremely confident
Comment:
Negative nominal rates are clearly feasible. But as they are also distortionary if the real rate of discount is non-negative, they are not desirable and will not be feasible for long. Moreover, they do not seem to have proved effective at stimulating credit growth.

The Importance of Elections for UK Economic Activity

Question 2: Do you agree that the outcome of the general election will have non-trivial consequences for aggregate economic activity (employment and GDP)?

Answer:
Strongly Agree
Confidence level:
Extremely confident
Comment:
The election could drastically alter macroeconomic policy in the UK, and for the worse. Given the closeness of the likely outcome of the election, the Labour Party's denial of their role in ruining the public finances prior to 2010, their continued focus on increasing public expenditures and the likelihood of needing a working arrangement with the even more spendthrift SNP, the prospects for the UK are very precarious - almost on a knife-edge.

Question 1: Do you agree that the austerity policies of the coalition government have had a positive effect on aggregate economic activity (employment and GDP) in the UK?

Answer:
Neither agree nor disagree
Confidence level:
Very confident
Comment:
The short-run aim of the coalition was not to stimulate economic activity but to repair public finances and thereby create the conditions for higher economic growth in the longer term. They have been moderately successful in their short-term aim and are starting to achieve their longer-term aim.

Transparency and the Effectiveness of Monetary Policy following the Warsh Review at the Bank of England

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Question 2: Do you agree that the Bank's proposal to release the policy decision, MPC minutes and (once a quarter) the Inflation Report all at the same time justifies a change in the structure of MPC meetings from two consecutive days to a process in which in the MPC meetings are spread out over seven days?
 
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Answer:
Disagree
Confidence level:
Very confident
Comment:
I don't see any connection between the decision to release information at an earlier date and the frequency of meetings. Given the inactivity of the MPC over the last few years, having fewer meetings makes sense. If a crisis arose in the gap between meetings that requires the MPC to meet then I hope that the new timetable would not prevent such a meeting taking place.

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