Do short-term governments affect the UK’s productivity?
Since the economic crisis labour productivity growth in the UK has been very poor. The Bank of England estimate that output per hour (productivity) is 16% lower than it should be given pre recession trends. With output recovering and high levels of employment, many argue that the so-called ‘productivity puzzle’ is the reason behind lagging […]
Why is inflation so low?
Zero inflation is trending. The consumer price index in the UK was at the same level in February as it was a year earlier. The reporting of this figure on the BBC website created some unintended amusement, however. The drop to zero, we were told, was “sharper than many analysts had expected”. And what was […]
Forward guidance needed for companies, not consumers
Most of the commentary on the UK’s economic recovery focuses on consumers. Are they taking on too much debt again to finance their spending? Is there a bubble in house prices, as people get excited about bricks and mortar again? Certainly, in terms of its sheer size, spending by consumers is by far the biggest […]
No interest rate changes for three years? Zero hours contracts for the Monetary Policy Committee!
The new Governor of the Bank of England, Mark Carney, said last week that interest rates will not be raised until unemployment falls below 7 per cent, a process he thinks will take three years. The battle of Austerlitz in 1805 was one of Napoleon’s greatest victories, leading to his complete domination of Continental Europe. […]
How expert are experts? Time to end the independence of the Bank
The Bank of England has held short-term interest rates very close to zero for several years, with devastating consequences for the incomes of millions of frugal people. The Bank’s latest wheeze suggests that savers pay the banks for the privilege of holding their money. The Bank has pumped hundreds of billions of pounds into the […]
Macro-economic modelling and its uses
An International Macro Symposium conference this week hosted by the ESRC and the Oxford Martin School has brought home to me how little things have changed in some quarters. There is still a belief that with some tweaks the old modelling frameworks can capture the elements that were missing before the crisis, and a deeply […]
