Wendy Carlin's picture
Affiliation: 
University College London
Credentials: 
Professor of economics

Voting history

Covid-19: Economic Policy Response

Question 3: Which would be the maximal public debt you would be willing to tolerate if used effectively (as in your answers to 1 and 2 above) to support an economic recovery?

Answer:
>140% of GDP
Confidence level:
Confident
Comment:
This is a situation for which the use of the public debt as a shock absorber is appropriate, and the interest burden will be limited by the very low interest rate on public debt. If stringent measures to control the spread of the virus are implemented (a big 'if' as of now), then combined with a coherent package of measures to 'hold' economic relationships in place, the recession will be V-shaped and longer term economic damage will be limited.

Question 2: Which of the following would have the second greatest impact in mitigating the economic effects of the coronavirus economic crisis in the UK?

Answer:
Making unemployment benefits more generous, streamlined, or comprehensive
Confidence level:
Confident
Comment:
Given the support for employees (and their employers) in the Question 1, this will help fill the income gap for those with more precarious employment, allowing people to pay their bills and buy essentials.

Question 1: Which of the following would have the greatest impact in mitigating the economic effects of the coronavirus economic crisis?

Answer:
Government transfers to and bailouts of businesses
Confidence level:
Confident
Comment:
I interpret this to include the government's announced retention pay scheme - paying 80% of an employee's previous wage up to a cap. This preserves the employment relationship and is likely to permit a rapid return to normal levels of activity once the pandemic is over.

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?

Answer:
None of the above, other, or no opinion
Confidence level:
Confident
Comment:
See previous comment.

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:
None of the above, other, or no opinion
Confidence level:
Confident
Comment:
Aggregate demand has recovered and unemployment is very low but investment and productivity growth remain weak reflecting weak confidence of business in the future growth of their markets. Policies to reduce uncertainty about demand management (in the event of a recession) and to direct innovation - for the zero carbon transition, for example, are likely to be helpful.

Pages