I think fiscal rules, backed by an independent watchdog with a wider mandate than the current OBR, are a good idea. The problem with the fiscal charter is that it is a very bad fiscal rule. Fiscal aggregates are subject to all kinds of shocks beyond the economic cycle, Trying to achieve a surplus each year will therefore lead to costly volatility in taxes or spending, just as having to reach an inflation target each year would lead to damaging volatility in interest rates. The target is also asymmetric in a cyclical sense, and so puts no pressure on governments to reduce debt more rapidly in boom years.
Question 1: The Chancellor forecasts a cyclically adjusted fiscal surplus by 2017-18 and in cash terms by 2019-20. Do you agree that this planned path of fiscal consolidation is appropriate?
A period of low interest rates and low real wages are a time to substantially increase public investment, yet this is precluded by the aim to achieve surplus by 2019. Such a sharp fiscal consolidation while interest rates remain so low is also risky: if the UK is hit by an unexpected negative shock, monetary policy has little scope to counteract the shock. While a policy to reduce the debt to GDP ratio over the long term is sensible, any deficit under 3% will do this. Continued surpluses will put all the burden of adjustment on the current generation.
The CFM surveys informs the public about the views held by prominent economists based in Europe on important macroeconomic and public policy questions. Some surveys focus specifically on the UK economy (as the CFM is a UK research centre), but surveys can in principle focus on any macroeconomic question for any region. The surveys shed light on the extent to which there is agreement or disagreement among these experts. An important motivation for the survey is to give a more comprehensive overview of the beliefs held by economists and in particular to include the views of those economists whose opinions are not frequently heard in public debates.
Questions mainly focus on macroeconomic and public policy topics. Although there are some questions that focus specifically on the UK economy, the setup of the survey is much broader and considers questions related to other countries/regions and also considers questions not tied to a specific economy.
The surveys are done in collaboration with the Centre for Economic Policy Research (CEPR).
Autumn Statement & Charter for Budgetary Responsibility
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Question 2: Do you agree that the Charter for Budgetary Responsibility is helpful in underpinning the credibility of fiscal policy?
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Question 1: The Chancellor forecasts a cyclically adjusted fiscal surplus by 2017-18 and in cash terms by 2019-20. Do you agree that this planned path of fiscal consolidation is appropriate?
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Deal or no deal: The Greece standoff
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Question 3: Do you agree that implementation of the agreement will lead to an expected decrease in Greek debt repayments?
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Question 2: Do you agree that Greece would be better off defaulting right now rather than signing to the agreement under consideration?
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Question 1:
Do you agree that, on balance, the implementation of the agreement as outlined in media reports will have a non-trivial negative effect on Greek GDP?
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