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

Voting history

Post Covid-19 Potential Output in the Eurozone

Question 2: How much lower will the potential growth rate of GDP in the Eurozone in 2025 be due to Covid-19 relative to pre-Covid forecasts?

 

Answer:
No different
Confidence level:
Not confident
Comment:
Forecasting is hard. For growth rates, using a random walk, so expecting no difference seems a good way to reflect how not confident I am.

Question 1: How much lower will the potential level of GDP in the Eurozone in 2025 be due to Covid-19 relative to pre-Covid forecasts?

 

Answer:
2% or less
Confidence level:
Not confident
Comment:
Forecasting levels of output four years out is hard. So many bad and good policies, lucky and unlucky shocks could happen until then. See https://personal.lse.ac.uk/reisr/papers/18-wrong.pdf

Lockdowns and UK Economic Performance

Question 3: Using not only the policy tools that have been part of the UK policy mix thus far but also policy tools implemented in other countries, to what extent does the government face a tradeoff between saving lives and preserving livelihoods? 

Answer:
Small tradeoff
Confidence level:
Not confident
Comment:
The tradeoff was not there back in March, since controlling the virus was needed to both save lives as well as to preserve economic activity. Now, uncertainty is lower (even if the danger is as high), and the marginal pain of economic losses is higher. So there possibly is a tradeoff.

Question 2: How much will the new lockdown measures introduced on Thursday November 5 hurt UK economic activity this year relative to a counterfactual with the milder measures adopted over the summer?

Answer:
Large damage
Confidence level:
Confident
Comment:
Previous stocks of savings have been depleted. Uncertainty is high because the government's credibility is low so, according to the media, many do not believe the lockdown will only last until early December. And, again from media reports, it seems harder to get people to comply, as they have adjusted their risk tolerance, in which case the government restrictions will bind behavior, unlike back in March.

Question 1: How much of the decline in GDP experienced to date would have been avoided in the absence of any lockdown measures or other policy interventions (such as fiscal support)?

Answer:
A small portion of the decline
Confidence level:
Confident
Comment:
Back in March, by the time the UK government imposed a lockdown, people had already been voluntarily withdrawing from contact with other isolating. The people led, the government followed. There would have been a large tumble in GDP even without the lockdown, as the experience in Sweden suggests.

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