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

Voting history

Secular Stagnation

Question 1: Do you agree- making your own definition of secular stagnation clear if you disagree with that offered here- that it is more likely than not that the advanced Western economies have entered into a period of secular stagnation?

Answer:
Disagree
Confidence level:
Confident
Comment:
The term “secular stagnation” is used for two quite different hypotheses: (1) the natural rate of interest needs to be negative to secure full employment or (2) long term growth in advanced economies will be slower due to various “headwinds”. I am not convinced by either. First, in both the US and the UK the unemployment rate is only a bit above its equilibrium level and still falling, without the need for negative real rates (as actually paid by typical borrowers). Second, the cited headwinds, such as declining educational attainments, apply to the US but not to the UK. And personally I am optimistic about the future rate of technical progress, including a large and continuing contribution from ICT. Having said that, my own research suggests that the advanced countries have suffered a permanent hit to GDP per head due to the financial crisis of the order of 5%. So though growth will resume it will be from a lower base than prior to the crisis. On top of that there are the continuing problems in the Eurozone but these are due to the way that monetary union has operated in practice --- principally Germany's refusal to guarantee the debts of the countries in trouble, not to secular stagnation.

Migration and the UK economy August 2014

Question 2: Do you agree that current government policies with respect to non-EU migration (including policies on students, skilled workers, and family migration) are effective in maximizing the gains to the economy from migration while minimizing any possible negative impact to specific groups?

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
It is difficult to see how these policies could be effective, at least in the short term, given the constraints under which they have to operate. We should have adopted the Australian system many years ago but we didn't. (Their policy on family migration is much tougher than ours for example). But over a long enough period and if carried through consistently they should have an impact in what I argue is the right direction, namely reducing unskilled migration from non-EU countries. Of course it would be better if we could control unskilled EU migration as well.

Question 1: Do you agree that migration to the UK can be expected to be beneficial for the average income of current UK inhabitants in the upcoming decade?

Answer:
Disagree
Confidence level:
Not confident
Comment:
My answer, that the average income of current inhabitants of the UK will be lowered by further migration over the next decade, is based on my judgement that the bulk of the migrants will be relatively unskilled. They will come predominantly either from Commonwealth countries or from the poorer parts of the EU. So the average level of human capital per capita in the UK economy will fall. Of course this does not mean that everyone's income will fall (relative to a low migration world) since the highly skilled and those who purchase the services of unskilled labour will benefit. I am aware that a number of studies have found that the impact of migration on wages and employment of the native British is small. However, there does not seem to be much doubt about the sign of the effect. In addition the studies do not consider all the costs associated with migration, what one might call the costs of integration. The latter does not just mean additional schools and housing but also the policing and security costs of dealing with ideologies which are fundamentally at variance with traditional British values (not to mention the EU's Copenhagen principles).

Economic Consequences of an Independent Scotland June 2014

Question 2

Assuming that Scotland becomes an independent country, do you agree that the UK government's position of ruling out a monetary union is in the economic interests of the continuing UK? 

Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
As has been argued by many others, a currency union would require a fiscal and banking union as well to make it work. Otherwise the UK government would be on the hook for unquantified liabilities generated by the Scottish finance industry. I can't see an independ Scottish govenrment agreeing to make the necessary concessions to make this possible. .

Question 1

Do you agree that that Scotland would better off in economic terms as an independent country?

Answer:
Disagree
Confidence level:
Confident
Comment:
I think that an independent Scotland would suffer a one-off negative shock due to uncertainty about its currency and EU membership. I do not think it likely that an independent Scottish government would be able to follow policies which would raise the Scottish growth rate. The best bet for Scotland would be to follow Ireland's earlier strategy. But it is very unlikely that the EU would permit Scotland to cut corporation tax to Irish levels, assuming that Scotland was able to join. Salmond's record of promising everything to everybody does not inspire confidence that policy will be growth-promoting in practice.

Pages