Ricardo Reis's picture
Affiliation: 
London School of Economics
Credentials: 
AW Phillips Professor of Economics

Voting history

Covid-19: Economic Policy Response

Question 3: Which would be the maximal public debt you would be willing to tolerate if used effectively (as in your answers to 1 and 2 above) to support an economic recovery?

Answer:
140% of GDP (e.g. if fiscal support were trippled)
Confidence level:
Not confident
Comment:
Very hard to guess what real interest rates will be like once this crisis is over, and so how sustainable it will be. Importantly, it depends on how long we will been on lockdown.

Question 2: Which of the following would have the second greatest impact in mitigating the economic effects of the coronavirus economic crisis in the UK?

Answer:
Making unemployment benefits more generous, streamlined, or comprehensive
Confidence level:
Extremely confident
Comment:
The social safety net has to be there for these crisis times. Moreover, if it proves to fail, the uncertainty that follows will cause a paradox-of-thrift slump (https://ideas.repec.org/p/cpr/ceprdp/9454.html)

Question 1: Which of the following would have the greatest impact in mitigating the economic effects of the coronavirus economic crisis?

Answer:
Government credit support for businesses
Confidence level:
Extremely confident
Comment:
First priority is to stop a cascade of defaults and layoffs to prevent the amplification of the crisis and a permanent impact on productive capacity. Credit as opposed to transfers/bailouts are preferred because (i) they preserve fiscal space, which will be needed very soon for the post-quarantine times and (ii) are better targeted to the problem, which is to cover costs and payments. (https://t.co/C28KajKxz1?amp=1)

The UK Productivity Puzzle

In the last two questions you are asked which government policies are best suited to help the UK emerge from its productivity growth slowdown. Question 3 asks for your most preferred policy option, while question 4 asks for your second choice. You may use the comment section to outline specific policy recommendations.

Question 3: Which of the following policies would best help improve private sector productivity?

Answer:
Regulatory and competition policies, possibly including financial regulation
Confidence level:
Confident
Comment:
Much could be done to foster more dynamism in the UK economy, and to remove distortions in the allocation of capital.

Question 2: Which of the following was the second most important cause for the slowdown in UK productivity growth?

Answer:
Human capital including education and employee skills
Confidence level:
Not confident
Comment:
None of the other factors you list seem to me to be potentially important enough to explain it. But the UK has now for a long time relied on immigration to compensate for missing skills in its labor force.

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