Nicholas Oulton's picture
Affiliation: 
London School of Economics
Credentials: 
Senior Visiting Research Fellow

Voting history

Brexit: the potential of a financial catastrophe and long-term consequences for the UK financial sector

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Question 3: What do you think will be the overall economic consequences of Brexit for the UK?

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Answer:
Mildly negative
Confidence level:
Not confident
Comment:
The crucial issue is what sort of policies will be followed in the event of Brexit? If these are sensible, the result will be mildly negative since we would presumably be excluded from the Single Market but get some sort of free trade deal with the EU. Even if broadly sensible it is very unlikely that we would move to unilateral free trade with the whole world. And there is some risk of really stupid policies being adopted by a successor government.

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Question 2: What is the probability that the UK experiences such a significant disruption to financial markets and asset prices following a vote for Brexit on 23 June?

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Answer:
nontrivial but ≤ 10%
Confidence level:
Confident
Comment:
The question was about disruption which is not the same as falls in a few asset prices. The latter occur all the time for a variety of reasons (and non-reasons).

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Question 1: Do you agree that there would be substantial negative long-term consequences for the UK financial sector if the UK were to leave the EU?

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Answer:
Agree
Confidence level:
Confident
Comment:
The eurozone would almost certainly use Brexit as an opportunity to impose new regulations which discriminate against London in euro-related transactions.

The future role of (un)conventional unconventional monetary policy

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Question 2:  Do you agree that central banks should operationalise the use of these alternative tools of unconventional monetary policy for use either in the near term, or in the future, as economic conditions warrant?

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Answer:
Strongly agree
Confidence level:
Extremely confident
Comment:
In the UK case we have in effect already operationalised the use of helicopter money sine the period of active QED coincided with a large budget deficit. In other words, pensions and welfare benefits were being paid for by printing money, at least in part. So I don't see any great issue of principle here. We might as well retain the option of doing this again, should it prove necessary

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Question 1: Do you agree that central banks should continue to use the unconventional tools of monetary policy deployed in response to the global financial crisis as part of monetary policy under normal economic conditions?

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Answer:
Strongly agree
Confidence level:
Extremely confident
Comment:
Since we are likely to be near the zero lower bound for some considerable time, it obviously makes sense to retain the option of more QE, if and when needed.

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