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

Voting history

Asset Prices and Monetary Policy

Proposition 2: Asset prices and financial imbalances are best addressed using macroprudential tools and left out of the monetary policy decision making process.

 

Answer:
Strongly disagree
Confidence level:
Extremely confident
Comment:
The FPC should be given the mandate, and the tools, to directly stabilize the rate of growth of asset prices. But making this decision can be and must be coordinated with the MPC, whose remit is price stability. I explain this coordinated policy option in a series of books and paper that can be accessed on my website rogerfarmer.com. The simplest introduction is to be found in my book, Prosperity for All, published by Oxford University Press in 2016 and available on Amazon Kindle.

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:
Strongly disagree
Confidence level:
Extremely confident
Comment:
My answer is contingent on the recognition that the Bank has more than one policy instrument. I DO NOT favor the use of a single price index that includes house prices, for example, as an intermediate target for interest-rate-setting decisions. Instead, I have argued extensively in published work, that the Bank should directly stabilize the rate of growth of an asset price index by open market operations in risky versus safe assets.

The “Spend Now, Tax Later” Budget

Question 3: Which of the following best characterizes the pace at which the budget addresses UK’s medium term fiscal challenges (deficit and debt)?

Answer:
Just right
Confidence level:
Not confident
Comment:
Time will tell.

Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?

Answer:
Moderately
Confidence level:
Confident
Comment:
This is a welcome move that will partly offset the increase in corporate taxes.

Question 1: How will the increase in the corporate tax rate from 19% to 25% affect the UK’s international competitiveness in the medium term?

 

Answer:
Moderate damage
Confidence level:
Confident
Comment:
The US is contemplating a similar corporate tax increase. This is unlikely to cause major shifts in location of businesses particularly as tax rates remain within the bounds of similar countries.

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