Tony Yates's picture
Affiliation: 
University of Birmingham
Credentials: 
Professor of Economics

Voting history

2014 Autumn Statement

 

Question 2: Do you agree that the underperformance of tax receipts in recent years, provides a strong case for higher taxes?

Answer:
Agree
Confidence level:
Confident
Comment:
Yes it does, with a couple of qualifications. First, not yet. With monetary policy at the zero bound, and QE of uncertain furher impact, and inflation sliding somewhat, a fiscal tightening right now is not advisable. Second, it's plausible that productivity will bounce back, and that such tax increases cd be reversed later.

Question 1: Do you agree that the scale of this planned reduction in total managed expenditure is credible?

Answer:
Strongly Disagree
Confidence level:
Very confident
Comment:
Not credible for a couple of reasons. First, they failed to meet the targets they set last time, so why believe a second time. Second, the first lot of cuts made were no doubt the easiest, low-hanging fruits. The seocnd lot will be harder. Each expenditure review seeks to prioritise and cut low priorities. So inevitably further rounds of cuts fall on higher priority items. This gets me to the second reason. These cuts aren't wanted, probably not even by most of the Tory party either.

Devolving Income Tax Powers within the UK

Question 2: Do you agree that that there is a clear economic case for establishing "English votes for English laws" with the same tax and spending powers as the Scottish Parliament?

Answer:
Disagree
Confidence level:
Confident
Comment:
For reasons stated above, I'm against devolving fiscal policy, both to Scotland and, therefore, to England. If devolution to Scotland proceeds, there is a clear political [not economic] case for reciprocating for England. But factors don't point all one way. The predominance of England in the UK as a whole will tend to afford certain advantages that might weigh against the need for formal devolution. And the 'favour' of one-sided devolution only might be a bribe to keep the union together, which might be worth paying.

Question 1: Do you agree that the economic benefits of devolving full income tax powers to the Scottish Parliament and Welsh Assembly outweigh the possible costs?

Answer:
Disagree
Confidence level:
Confident
Comment:
I have blogged on this topic. I worry that devolution of tax and spending powers will i) inhibit risk sharing and ii) inhibit the ability of Federal fiscal policy to conduct counter-cyclical fiscal policy to smooth the business cycle, especially at the zero bound, and also to undertake extraordinary operations like bailing out the banks. The risk being that some areas may choose to tax and spend up to the maximum, leaving little further room to tap the tax base. And also that devolved borrowing that might follow from devolved tax powers would constrain borrowing capacity of the centre, and perhaps lead to tragedy of the commons problems.

Secular Stagnation

Question 2: Do you think that current structural and fiscal policies should place a considerably greater emphasis on pushing the natural rate into positive territory?

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
Given the trajectory of inflation in say the US and the UK, one could make a case for mildly more stimulatory policy, but not much more. In the EZ things are much clearer that greatly more stimulatory fiscal and monetary policy should be implemented. Here I'm taking the trajectory of inflation relative to target as a rough proxy for whether, given the natural rate, policy is sufficiently stimulatory or not. That is not foolproof, and the models that would justify it beg many questions. But without them I would not know how to proceed.

Pages