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

Voting history

Covid-19: Economic Policy Response

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.

Question 1: Which of the following was the most important cause for the slowdown in UK productivity growth?

Answer:
(Insufficient) investment in research and development
Confidence level:
Not confident
Comment:
The slowdown in investment post-Brexit has lowered the capital stock, which lowers output per hour. Before the referendum, a combination of the housing boom, the financial crisis, and misallocation of capital across sectors all in different ways contribute to either too little or mis-directed investment. I picked this option because it was the one closer to "Insufficient investment", but I would not add R&D exclusively to that answer.

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