Sir Charles Bean's picture
Affiliation: 
London School of Economics
Credentials: 
MA Cambridge
PhD MIT

Voting history

National Living Wage and the UK economy

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Question 1: Do you agree that the new National Living Wage is likely to lead to significantly lower employment?

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Answer:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
Clearly at some point the minimum wage could be raised to such a level that it must lead to a noticeable reduction in employment. But the empirical evidence relating to past increases (in this country and abroad) is sufficiently ambiguous that it is impossible to be confident about the net impact of the planned increase. My expectation is that it will probably modestly reduce employment below the level it would otherwise have reached, but I have very little confidence in that judgement.

Brexit and financial market volatility

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Question 2: Do you agree that the possibility of Brexit significantly increases uncertainty and volatility in financial markets and the economy in general?

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Answer:
Agree
Confidence level:
Very confident

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Question 1: The value of the pound fell sharply this week. Do you agree that the public debate on Brexit can be expected to (continue to) lead to a substantially higher level of exchange rate volatility in the upcoming months?

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Answer:
Agree
Confidence level:
Very confident

China’s growth slowdown: likely persistence and effects

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Question 2:

Do you agree that if the Chinese slowdown turns out to be persistent, it will have a significant impact on UK growth (say, in the order of a few tenths of a percentage point) and/or it will justify a material change in monetary policy (for example, in terms of the timing and speed of a return to ‘normal’ interest rates) and fiscal policy (for example, in terms of the timing and speed of fiscal contraction).

Answer:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
My central expectation is that a sustained Chinese slowdown will have little net impact on the growth in UK aggregate demand, with the adverse effect on net exports roughly offset by the positive effect on consumption from the terms of trade gain associated with lower commodity prices. The one potential qualification is if the slowdown is so abrupt that it leads to unexpectedly large losses for those UK banks with large exposures in Asia, particularly Standard Chartered and HSBC. That could result in rather stronger adverse effects onto UK growth through financial sector linkages (this is a risk that this year's BoE banking stress test is intended to investigate).

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Question 1:

Do you agree that the Chinese economy is likely (say more than 50% probability) to maintain in the medium term (say, for at least ten years) a rate of annual growth exceeding 6%.

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Answer:
Strongly Disagree
Confidence level:
Very confident
Comment:
There are at least two reasons for expecting a sustained slowdown relative to past rates of growth. First, the rapid growth of recent years was in large part catch-up growth based on a very high investment share. But as the economy's stock of capital grows, so the marginal product from additional investment is bound to fall. Moreover, it will be difficult for the Chinese authorities to ensure that consumption increases by enough to take up the slack as the investment share falls back. Second, the rapid growth also relied on strong growth in the urban labour force, as workers migrated to the cities from the countryside. But the scope to maintain that is diminishing, while the growth in the working age population has slowed sharply, in part as consequence of the "one-child" policy (recent softening in the policy will make relatively little difference to the projected growth rate of the working-age population). Other countries that have experienced strong catch-up growth, such as Japan and Korea, saw growth slow as output per capita approached advanced-economy levels: China will be no different.

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