Roger Farmer's picture
Affiliation: 
University of Warwick
Credentials: 
Professor of Economics

Voting history

Assisting Households Facing Rising Energy Costs

Question 3: Should a windfall tax be used to (fully or partially) finance support to households?

Answer:
No
Confidence level:
Confident

Question 2: Which of the following is the best way to address the impact of rising energy costs on household finances?

Answer:
Price caps based on energy use
Confidence level:
Not confident
Comment:
Much depends on the trade off between simplicity and effectiveness. Price caps based on energy usage have the advantage of providing an incentive to economize on energy. This is the economist's choice. Uniform price caps, on the other hand, have the advantage of being easy to understand and relatively easy to implement. This is the politician's choice.

Question 1: Overall, which of the following best characterises how the government’s proposed energy policies will leave the average UK household over the medium term:

Answer:
Better off
Confidence level:
Very confident
Comment:
The fact that the policy may be poorly targeted does not take away from the fact that it will substantially reduce energy bills for UK households. The fiscal impact will raise debt in the short to medium term and has already had an impact on the exchange rate. I do not see merit in the argument that this will in any way lead to a balance of payments crisis for a country, like the UK, that borrows primarily in its own currency. The exchange rate drop will surely raise prices in the short term. How much is anybody's guess. In the medium to long term, much depends on the Bank of England reaction. I have no confidence in the current 'expert consensus' on the monetary policy transmission mechanism. Raising rates may stem the exchange rate fall and ameliorate the associated upward pressure on UK prices, but it will also likely trigger a recession.

Levelling Up Productivity Gaps in the UK

Question 2: Which policies could best help reduce regional productivity disparities?

Answer:
Public or subsidized investment in lagging communities
Confidence level:
Confident
Comment:
High productivity areas do not develop without infrastructure. Government has a role through provision of road and rail networks and by investing in research universities. But, if the goal is to develop additional high productivity centers, it is important that government funds are concentrated and focused, rather than dissipated across a large number of disparate rural communities. The UK has room for no more than two or three additional growth centers: one in the north of England, one in Scotland and one in Northern Ireland.

Question 1: What is the primary factor driving regional productivity disparities in the UK?

Answer:
Agglomeration Effects
Confidence level:
Extremely confident
Comment:
The evidence for increasing returns-to-scale as the major determinant of high productivity, and high productivity growth, is overwhelming.

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