Morten Ravn's picture
Affiliation: 
University College London
Credentials: 
Professor of economics
Head of Department

Voting history

COVID-19 and UK Public Finances

Question 2: What is the best way to (eventually) reduce public deficits and debt?

Answer:
None of the above, other, or no opinion
Confidence level:
Not confident
Comment:
I do not think that this can be answered unconditionally. We need to see how the crisis pans out. In principle, the optimal policy would be to issue debt now and then tax finance the increase in debt (including inflation tax) in present value terms once the crisis is over. But the shock is so large that it would be better to think about contingent policies in case debt dynamics are worse than anticipated.

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:
No opinion
Confidence level:
Very confident
Comment:
At this point, there do not seem to be reason to worry about public debt, it's more important to avoid that the economy comes to a stand still. The government still has the option to cancel Brexit which would help coping with the shock.

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:
None of the above, other, or no opinion
Confidence level:
Very confident
Comment:
I think unemployment benefits can be extended in duration without any negative impact on incentives. It would also be a good idea to provide income support to low income households who lose their jobs or have problems paying rent, mortgages, etc.. It would seem a great idea to stop student loan repayments. I see less reason right now for providing transfers to better off households.

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:
I think it is important to aim at minimizing the extent to firms do not destroy otherwise productive jobs. So government should cover (high share of) labor costs and possible lost revenues of firms to make sure that jobs are retained as far as possible. This can be even be done on an insurance basis. This is extra important for SMEs which will be less able to come through the crisis without laying off employees and without closing down business than larger firms. This will also help fighting the health crisis by facilitiating closure and social distancing policies.This is a double-dividend property that other policies do not have. In addition it will put the economy in a stronger position to recover after the crisis.

The UK Productivity Puzzle

Question 2: Which of the following was the second most important cause for the slowdown in UK productivity growth?

Answer:
Low demand (including due to the financial crisis, austerity policies, or Brexit)
Confidence level:
Confident
Comment:
As mentioned above, labor market, measurement, goods market may be important. Low demand may of course also be important in terms of landing the economy in a low-growth equilibrium. It is important to consider whether fiscal and monetary policy could be used to address this.

Pages