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

Voting history

Assisting Households Facing Rising Energy Costs

Question 3: Should a windfall tax be used to (fully or partially) finance support to households?

Answer:
Yes
Confidence level:
Extremely confident
Comment:
For fairness and efficiency reasons.

Question 2: Which of the following is the best way to address the impact of rising energy costs on household finances?

Answer:
Conditional/targeted transfers
Confidence level:
Not confident
Comment:
This is a very complicated market, which I don't fully understand..And I don't understand the ramifications of the various policies (e.g. for the providers). Policy design should ensure fair access to energy, abolish the standing charges, and maintain a price signal to incentivize energy conservation.

Question 1: Overall, which of the following best characterises how the government’s proposed energy policies will leave the average UK household over the medium term:

Answer:
Worse off
Confidence level:
Confident
Comment:
It's not clear what the counterfactual is but given the size of the negative external terms of trade shock, the average household will be worse off. This is exacerbated by poorly designed energy policy compounded by the recent fiscal policy mistakes - so definitely worse off than necessary.

Surging Inflation in the UK

Question 2: Will the inflation surge of 2021 prove persistent?

Answer:
No
Confidence level:
Not confident
Comment:
On the aggregate demand side, deflationary forces from the fiscal and monetary sides combined with the squeaze on living standards dampening consumption of lower and middle income households will act to reduce inflation; on the supply side some of the global factors exacerbating inflationary pressure will likely ease. The damage to potential output is still unclear, however. Meanwhile, there is little sign of systematic wage increases building in lagged inflation. So, on balance, inflation may ease back somewhat in 2023.

Question 1: Which of the following factors is the primary reason for the rise in inflation in 2021?

Answer:
No opinion or other
Confidence level:
Confident
Comment:
For the UK, base effects, energy price rises, and the pandemic-induced distortion in consumer demand from services toward durable goods (interacting with a similar global pattern plus supply chain disruption) account for the rise in inflation in 2021. So, a cocktail of supply-side factors was responsible (rather than excess aggregate demand or inflation expectations).

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