Question 4: Which of the following policies would be your second choice of policy to boost private sector productivity, in addition to or absent your first choice?
Answer:
None of the above, other, or no opinion
Confidence level:
Confident
Comment:
Brexit will reduce UK productivity for well known reasons. The more difficult the government chooses to make it to trade with the EU, the greater the productivity loss.
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:
Aggregate demand management through fiscal and/or monetary policy
Confidence level:
Confident
Comment:
See earlier comment
Question 1: Which of the following was the most important cause for the slowdown in UK productivity growth?
Answer:
Low demand (including due to the financial crisis, austerity policies, or Brexit)
Confidence level:
Confident
Comment:
Until 2007, the UK largely bucked an international slowdown in productivity growth, partly but not all because of financial services. Since the GFC productivity growth has been below international levels. I have argued that this is associated with two events that greatly increased uncertainty about future demand growth: austerity and the consequent delayed and weak recovery, and Brexit. Without these two events, UK productivity growth would have been closer to international levels.
Question 2: Do you agree that, in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy makers can afford to wait for greater certainty about real wage developments and building inflationary pressure before raising interest rates?
There are many reasons for this, including the point made in answering the previous question. Most important, however, is the asymmetry of costs if policy is wrong. Tighten too late and we get a modest inflation overshooting. Tighten too early and, because inflation is sticky near zero, it may be years before central banks realise their mistake, leading to very large welfare losses.
There are many reasons why the NAIRU may have fallen over the last decade. One that is seldom talked about is productivity. Productivity growth in many countries has been low since the financial crisis. However it seems unlikely that this reflects an equivalent decline in fundamental technical progress. Instead what seems more likely is that many firms have put off investment in labour saving improvements because of weak growth. If labour does become scarce, we are more likely to see a catch up in productivity growth than rising inflation.
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).
The UK Productivity Puzzle
Question 4: Which of the following policies would be your second choice of policy to boost private sector productivity, in addition to or absent your first choice?
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?
Question 1: Which of the following was the most important cause for the slowdown in UK productivity growth?
Labour Markets and Monetary Policy
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Question 2: Do you agree that, in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy makers can afford to wait for greater certainty about real wage developments and building inflationary pressure before raising interest rates?
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Question 1: Do you agree that a strong labour market is a good indicator of building inflationary pressure?
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