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

Voting history

Market Turbulence and Growth Prospects

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Question 1: Do you agree that economic growth prospects for the global economy have seriously deteriorated?

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Answer:
Disagree
Confidence level:
Confident
Comment:
Prospects have deteriorated seriously for oil-producing states but not for for the global economy . The fall in the oil price is largely due to a rise in supply relative to demand. So for oil-importing states it is a benefit. The recent fall in the Chinese stock market looks more like a correction of a bubble than a reappraisal of fundamentals. It is not very relevant for the rest of the world. The extent of the slowdown in Chinese growth (pretty small on official figures) is what really matters but it is unlikely that the fall in the Chinese stock market is an accurate measure of this.

China’s growth slowdown: likely persistence and effects

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Question 2:

Do you agree that if the Chinese slowdown turns out to be persistent, it will have a significant impact on UK growth (say, in the order of a few tenths of a percentage point) and/or it will justify a material change in monetary policy (for example, in terms of the timing and speed of a return to ‘normal’ interest rates) and fiscal policy (for example, in terms of the timing and speed of fiscal contraction).

Answer:
Strongly Disagree
Confidence level:
Very confident
Comment:
Question 2 is not clear about the time scale. Is it the same as in Question 1, 10 years? If so, I disagree. In the medium/long run UK growth does not depend on demand but on real factors (demography, total factor productivity, and innovation). The only qualification to this is that the UK has benefited from a terms of trade effect stemming from past Chinese growth: the opportunity to import Chinese goods at ever cheaper prices, whether directly or incorporated into other products (e.g. ipads). So if Chinese growth slows due to lower productivity growth then this favourable effect will be reduced. Over shorter time scales, where demand effects call the tune, I would expect the main effects to be on commodity exporting countries (not all emerging -- Australia is in this category). Exports to China are currently only about 1% of UK GDP. So indirect effects via other countries would have to be pretty big to impact the UK economy significantly.

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Question 1:

Do you agree that the Chinese economy is likely (say more than 50% probability) to maintain in the medium term (say, for at least ten years) a rate of annual growth exceeding 6%.

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Answer:
Strongly Agree
Confidence level:
Confident
Comment:
The slowdown from 10% to the current 7% is already very substantial. I see no reason to think that a further slowdown is likely, given the huge investments in infrastructure, R&D and innovation which China has made. Of course it is possible that Chinese growth has been overstated for some systematic reason. But the question was about the slowdown, i.e. change in growth rate, not the level of the growth rate.

ECB's quantitative easing

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Question 2:

Do you agree that the structure of the ECB's QE programme makes the Eurozone more fragile and increases the risk of one country leaving the euro?

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Answer:
Agree
Confidence level:
Very confident
Comment:
The failure once again of Eurozone countries to agree that "we are all in this together" surely makes the eventual exit of one or more countries more likely.

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Question 1:

Do you agree that the design of the ECB's QE programme reduces its effectiveness? 

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Answer:
Agree
Confidence level:
Very confident
Comment:
Would a Greek business be more likely to invest if in effect all Eurozone central banks were buying Greek government debt or if it is only the Greek central bank doing so? The answer to my question must be yes.

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