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

Voting history

A “new” UK industrial strategy ?

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Question 1: Do you agree that the UK needs a new industrial policy?

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Answer:
Agree
Confidence level:
Confident
Comment:
If a new industrial policy is interpreted as a policy oriented at productivity growth involving private and public sector collaboration, then this is needed.

The Future of Central Bank Independence

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Question 2: Do you agree that the traditional argument that less central bank independence leads to higher inflation will (still) be relevant over the next 48 months in Western economies?

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Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
I think the question is poorly framed. Recognition by the CB and the government that raising inflation to the target is a shared responsibility is required. It is not obvious that this undermines CB independence.

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Question 1: Do you agree that central bank independence in the Eurozone and the UK will decline over the next 48 months?

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Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
In spite of the use of QE, it appears that fiscal policy is needed to generate sufficient demand and, as a result, to raise inflation and inflation expectations to the CB's target. When the economy is at the ZLB, the credibility of the CB's inflation target is undermined. If fiscal policy is brought in to play to help bring inflation back up to target, this could be interpreted as reducing the CB's independence. Alternatively, it could be interpreted as recognition that the model of central bank independence is inadequate when the economy is mired at the ZLB.

German current account surpluses

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Question 2: Do you agree that the German government should increase public spending given its persistently large current account surplus and given that it is part of the Eurozone?

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Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
As phrased, the statement makes sense but it does not take account of the institutional basis of the functioning of the German economy as referred to in the previous comment. There are other policies that Germany could adopt that would promote domestic demand consistent with the underlying political economy and indirectly moderate the external imbalances in the Eurozone. The most important is to increase the incentives for women to participate in the labour force.

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Question 1: Do you agree that German current account surpluses are a threat to the Eurozone economy?

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Answer:
Agree
Confidence level:
Confident
Comment:
Germany's current account surpluses reflect deep-seated characteristics of the German political economy pre-dating the formation of the Eurozone. Germany - like a number of other northern European economies - has an export-oriented growth model. The commitment not to use fiscal policy or policies that boost the private housing sector to secure high employment (other than when faced with exceptional shocks as in the financial crisis) disciplines the large wage setters. The outcome is successful targeting of the real exchange rate, which can deliver high employment via external demand. It is these characteristics that make it highly problematic to have a common currency area comprising a group of countries able to target the real exchange rate and a group that cannot. The latter rely on domestic demand (private or public) to ensure high employment. This incompatibility is the root of the problem; current account surpluses are the manifestation.

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