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:
I think the present formulation of the remit (which has been in place since 2013) is just fine. Macro-prudential instruments are better suited to heading off a credit-driven asset-price boom as they can be targeted more precisely; monetary policy is a blunter weapon (even if it does 'get in all the cracks'). So the MPC should only be expected to aim off its inflation target to deal with an asset-price boom if the FPC judges its instruments are not up to the task.
In addition, adding an explicit house-price objective would muddy the waters (I have no objection to MPC targeting an inflation measure that includes a suitable housing element, such as CPIH). Furthermore, house prices often move for other reasons, such as fiscal measures, and it would seem inapproriate to expect MPC to seek to prevent such movements.
Proposition 2: Asset prices and financial imbalances are best addressed using macroprudential tools and left out of the monetary policy decision making process.
Answer:
Agree
Confidence level:
Very confident
Comment:
As already indicated, I think the structure of the two committees' remits is both fine and clear, with MPC only having an explicit role in dampening financial booms if the FPC judges its instruments are not up to the task and informs the MPC of the same.
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:
Confident
Comment:
The long-term damage to the economy and the public finances from the pandemic ('scarring') is still highly unclear but it is likely that some fiscal consolidation will be required in the medium/long term. So putting in place a (contingent) plan to close the deficit and put the debt-GDP ratio onto a falling trajectory over the medium/long term while providing continued fiscal support in the near term strikes the right balance in my view. The tax and spending measures necessary to stabilize the public finances can then be adjusted appropriately in the light of how the economy evolves over the next few years.
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.
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Fiscal Rules in the European Monetary Union
Question 2: Which of the following is the one reform you would choose to improve fiscal rules?
Proposition 1: The existing fiscal rules for European Monetary Union members require revision.
Asset Prices and Monetary Policy
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.
Proposition 2: Asset prices and financial imbalances are best addressed using macroprudential tools and left out of the monetary policy decision making process.
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)?
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