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

Voting history

The Importance of Elections for UK Economic Activity

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:
Agree
Confidence level:
Very confident
Comment:
The fact of the matter is that "austerity" has been greatly exaggerated. In every year from 2010 to 2013 real current expenditure on goods and services by general (local plus central) government has been higher than in any previous year. In 2013 it was 5% higher than in the last year of the boom, 2007. The much smaller total of investment by general government was cut a bit after the coalition came to power but is now much higher than it was during most of the Labour years. The budget deficit is a good deal higher than in anti-austerity France. Of course one can always argue that the government should have followed a still more expansionary fiscal policy (its monetary and exchange rate policies were also expansionary). But at some point any government would have had to get a grip on the deficit and the rising debt-GDP ratio, unless one believes that debts don't matter since they can always be inflated away. The financial crisis dealt a huge blow to the UK economy. But unemployment is now pretty low and still falling while employment is up.Productivity, for reasons not yet understood, has not recovered. But it is not clear how this would have been improved by additional government spending.

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:
Agree
Confidence level:
Confident
Comment:
In agreeing with the question I am assuming that the frequency of meetings will be reduced from 12 to 8 per year (except in emergencies). A reduction in frequency is a good idea in itself as monthly meetings encourage over-interpretation of news. They are also a treadmill for the staff.
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Question 1: Do you agree that the simultaneous release of the policy decision, the enhanced minutes (including the voting record) of the MPC meeting and (in the relevant months) the release of the Inflation Report will facilitate inference on the likely stance of monetary policy?
 
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Answer:
Agree
Confidence level:
Confident

Greece’s elections and the future of the Eurozone

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Question 2: Do you agree that refusal of the core EU countries to a renegotiation of the Greek bailout agreements would carry serious risks for the economic well-being of the Eurozone?

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Answer:
Disagree
Confidence level:
Confident
Comment:
No. The outcome would be better for Greece and the Eurozone. If the rest of the Eurozone forces Greece into exiting the euro this would likely be a much better outcome for Greece than continuing with current policies. Any attempt by the Eurozone (i.e. Germany) to punish Greece for such a choice (e.g. by forcing Greece out of the EU) should be strongly resisted by the UK. There would certainly be contagion from Greece but this would also be a good thing since either it would force debt restructuring and debt guarantees (Eurobonds) or it would lead to other countries exiting too. It is generally agreed that Greece can’t pay. A Syriza government will be committed to a “won’t pay” position which after all only acknowledges reality. So the rest of the Eurozone would be well-advised to seek a reasonable settlement with the Greeks which would have many precedents in sovereign debt crises. If to the contrary the rest of the Eurozone seeks to hold Greece to existing accords then the logic of the Syriza position is Grexit followed by default (“debt restructuring”). This would be a much better outcome for Greece than continuing with current policies which threaten a generation of slump and unemployment. It is time to acknowledge that the euro has been a disastrous economic experiment. So it needs to be either drastically reformed or abolished. It is well known that its founders wanted to push ahead with monetary union as a lever to bring about political union. But the latter has not happened, at least in the form which is currently needed, debt forgiveness and guarantees. So the Eurozone has a choice, either move towards debt forgiveness and Eurobonds or break up. Failure to make this choice will lead to political parties fundamentally hostile to the market economy attaining power.

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Question 1: Do you agree that a Syriza victory on 25 January would lead to a significant or sustained escalation in spreads for other peripheral Eurozone countries?

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Answer:
Strongly Agree
Confidence level:
Extremely confident
Comment:
The markets are already anticipating a Syriza victory so this has to be bad news for other highly-indebted Eurozone countries. The only counter to this would be massive QE by the ECB focused on Spanish, Portuguese and Italian government debt. But nobody seems to think this is likely because of German and other objections. It is not that governments currently in place in Spain, Portugal and Italy are going to seek debt forgiveness but rather that they will be replaced by other political movements (e.g. Podemos in Spain) who would be so inclined. Or at least that is a risk which markets will take into account.

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