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

Voting history

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.

Question 1: Which of the following was the most important cause for the slowdown in UK productivity growth?

Answer:
Human capital including education and employee skills
Confidence level:
Confident
Comment:
Before commenting more on human capital, I think measurement - of hours worked in particular - could potentially also be important (and better data would help one understand better how large the decline in labor productivity has been and whether it reflects TFP or not). Human capital though seems to me to be an important issue especially in terms of primary education where lack of investment in high quality state financed eduation has led to a two-tier system which serves well those who can afford private schools but not others. The same is true also for nurseries. I am aware that the survey is specifically asking about UKs experience post-2008. There is probably little doubt that other factors are important for this too. Wage growth has been very modest since the financial crisis and this might have induced poor labor allocation across jobs. Of course, it is unclear why wage growth has been so poor one possible reason being labor supply but others also being possible, It also seems that the poor productivity performance may be concentrated in services where lack of competition may be an issue. But I think it is fair to say that there is no single easy answer to the poor UK productivity performance.

Bitcoin and the City

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Question 2: Do you agree that the regulatory oversight of cryptocurrencies needs to be increased?

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Answer:
Agree
Confidence level:
Confident
Comment:
I don't see why. It seems pretty obvious that the cryptocurrencies have appeal for illicit markets and for tax evasion, both issues of concerns to policy. This should be regulated.

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Question 1: Do you agree that cryptocurrencies are currently a threat to the stability of the financial system, or can be expected to become a threat in the next couple of years?

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Answer:
Disagree
Confidence level:
Confident
Comment:
They seem too small at the moment to be a threat. Also, were a cryptocurrency to implode, the impact would probably be less country-specific than, say, a sudden large decline in London house prices, and this might indicate a less dramatic impact on financial stability. Of course, exponential growth in cryptocurrencies could change this within a reasonable horizon so it would seem prudent for policy makers to keep an eye these currencies.

House Prices and the UK economy

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Question 2: Do you agree that a more widespread weakening of the UK housing market will slow UK GDP growth significantly?

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Make sure to save each question separately

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
Should house prices drop significantly, the consequences could be dire at least in the short to medium term due to the impact on households. This would be exacerbated by increasing interest rates and one might be worried about the stability of the economy especially in case of a non-orderly Brexit outcome. On the other hand, UK house prices are crazy and many UK households use housing as their main savings vehicle which seems inefficient and may be one of the factors behind the low productivity of the UK economy. A dis-orderly Brexit could further worsen this issue if there are negative effects on the UK economy's competitiveness due to loss of access to the EU internal market. This would suggest that introducing capital gains taxes (to make housing less attractive as a savings vehicle) could help address both the high cost of housing in the UK and the UK's poor productivity performance. It's hard to see that this would be politically feasible though.

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