Patrick Minford's picture
Affiliation: 
Cardiff Business School
Credentials: 
Professor of economics

Voting history

Monetary Policy and Inequality

Question 1: How large is the impact of monetary policy on the joint distribution of income and wealth?

Answer:
Small
Confidence level:
Very confident
Comment:
The role of monetary policy is to stabilise the economy- inflation and output- and set prices in the long run. Hence its effect on the economy is short run. Inequality is the result of long run tendencies in the economy so monetary policy will not affect it except temporarily- being temporary, its effect is small.

Question 2: What role should inequality play in the monetary policy decisions (interest rate policy and quantitative easing)?

Answer:
No role
Confidence level:
Extremely confident
Comment:
See first answer. Monetary policy should focus on its role as a stabiliser and long run setter of the price level. It has no other role. Redistribution to reduce inequality is the role of the government through tax/benefit policy.

Fiscal Rules in the European Monetary Union

Proposition 1: The existing fiscal rules for European Monetary Union members require revision.

Answer:
Strongly agree
Confidence level:
Extremely confident
Comment:
Given the asymmetric shocks hitting the eurozone regions/countries, a unitary monetary policy cannot be an effective stabiliser. But national fiscal policy under normal budget constraints can. Simulations we have done in Cardiff on a New Keynesian DSGE model of the eurozone suggest these policies, absent the SGP, can be highly effective

Question 2: Which of the following is the one reform you would choose to improve fiscal rules?

Answer:
Re-nationalization of fiscal discipline
Confidence level:
Very confident
Comment:
As noted in my first response, national fiscal responses can greatly improve macro stability, without creating concerns about a 'transfer union'. Only for exceptional shocks where mutual assistance is needed, should the EU be involved in joint action.

Asset Prices and Monetary Policy

Proposition 1: The Bank of England’s mandate should be officially modified to take housing or other asset prices into account in its monetary policy decisions.

Answer:
Disagree
Confidence level:
Confident
Comment:
The target of monetary policy is controlling inflation and stabilising output over the business cycle. Our research on an estimated model of the UK suggests that this is done well by the current framework, though it could be improved by targeting nominal GDP. Housing and asset prices introduce targets that cut across this more general information.

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