‘Politically orchestrated groupthink’ [Ruth Lea]

This is what Ruth Lea, a pro Brexit economist of some prior distinction, dubbed the apparent agreement of the overwhelming majority of economists, and the HMT/IMF/OECD/NIESR cabal, who happen to think that Brexit will be costly.  This morning, on Twitter again, Ruth dubbed the IFS study that repeated the same message, ‘tired groupthink’.

If you think about it, this is a pretty strange argument.  The majority think one thing;  I, in the minority, think another.  Therefore this shows that the majority must be prey to the intellectual frailties of peer-pressure and political influence, while I, with few analytical friends, retain a rare clarity about the truth.

How many other areas of life would this logic extend to?  The debate about the benefits of the MMR vaccine combination?  Climate change?  The economic benefits of democracy?

Ponder a moment, and most of our conduct in life is our response to an interlocking series of consensuses.  That tell us that the chance of a plane crashing is vanishingly small;  that taxes and public services are good, democracy is good, the risks of crossing the road are acceptable;  that car seatbelts help avoid death;  that filling our face with cream buns is bad for us.  I would like to see Ruth and the other Brexiteers who have flung the ‘groupthink’ label [Gerard Lyons, John Redwood…] write diaries for us, so we can see whether they apply consistently this theory of the wisdom of the minority.  If they do, I feel sorry for them, for life under this regime must be extremely impractical  and hazardous.

I’m curious too as to what the minority have about them that makes them less prone to losing their way like the rest of us?  How do we tell that they are less ‘orchestrated’ or ‘tired’ or ‘groupthinking’?  Knowing the answer to these things would no doubt help the rest of us fortify ourselves against losing our way next time.

I also wonder just how this political orchestration is meant to have come about?  What would the BoE Governor, and his Monetary and Financial Policy Committees have to gain by agreeing to it?  If there was an effort at improper orchestration, why did the one dissenting member of the FPC on the matter not refer to it?  And how did the orchestration extend to the other independent research bodies?  Or to the 288 of us who signed that letter?  Was it so sophisticated that we are somehow unaware of it?  Does this claim invoke a peculiar Brexiteer variety of the false-consciousness that the Marxians are fond of?  If it does not, do the Brexiteer conspiracists not realise that for most economists, they have little to sell but their reputation for competence and integrity, and that the risk of being implicated in such an analytical heist would be financially disastrous?

[Added later, at suggestion of Sid Verma]  I’d also add that on many matters, the overwhelming majority of anti-Brexit economists being slandered here disagree.  As I pointed out in my Telegraph article, there are heated debates about methodology [heterodox or not], austerity [did the Coalition over do it or not?], monetary policy [are interest rates now too low or not, noting that both Sentance and Blanchflower signed our letter] and more.  So, if this is groupthink, it’s like the intellectual equivalent of a neutron bomb, leaving the powers of independent thought over all other ideas strangely unimpaired.

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280 economists now against Brexit as UCL and LSE sign

The letter: [published in The Times, 11.05.16]

Focusing entirely on the economics, we consider that it would be a major mistake for the UK to leave the European Union.

Leaving would entail significant long-term costs. The size of these costs would depend on the amount of control the UK chooses to exercise over such matters as free movement of labour, and the associated penalty it would pay in terms of access to the single market. The numbers calculated by the LSE’s Centre for Economic Performance, the OECD and the Treasury describe a plausible range for the scale of these costs.

The uncertainty over precisely what kind of relationship the UK would find itself in with the EU and the rest of the world would also weigh heavily for many years. In addition, there is a sizeable risk of a short-term shock to confidence if we were to see a Leave vote on June 23rd. The Bank of England has signalled this concern clearly, and we share it.

Brexit letter signatories, pre publication

Academics

[letter coordinators, alphabetically]

Paul Levine, Professor of Economics, University of Surrey; Simon Wren Lewis, Professor of Economics, Blavatnik School of Government, University of Oxford; Tony Yates, Professor of Economics, University of Birmingham;

[other academic signatories, in chronological order of their replies]

Christoph Thoenissen, Professor of Economics, University of Sheffield; Tatiana Damjanovich, Professor of Economics, University of Durham; Chris Martin, Professor of Economics, University of Bath; Antonio Navas, Lecturer in Economics, University of Sheffield; Matt Dickson, Assistant Professor of Economics, University of Bath; Alistair Hunt, Lecturer in Economics, University of Bath; Jolyan McHardy, Senior Lecturer in Economics, University of Sheffield; Peter Postl, Senior Lecturer in Economics, University of Bath ; Ian Gregory-Smith, Senior Lecturer in Economics, University of Sheffield; Aditya Goenka, Professor of Economics, University of Birmingham; Brian Main, Professor of Business Economics, University of Edinburgh; Kostas Mouratidis, Lecturer in Economics, University of Sheffield; Simon Burgess, Professor of Economics, University of Bristol; Alec Chrystal, Emeritus Professor of Money and Banking, Cass Business School, City University; Alexander Mihailov, Assistant Professor of Economics, University of Reading; Costas Milas, Professor of Economics, University of Liverpool; Michailis Stamatogiannis, Senior Lecturer in Finance, University of Liverpool; Marina Della Giusta, Associate Professor of Economics, University of Reading ; Peter Backus, Lecturer in Economics, University of Manchester; David Chivers, Lecturer in Economics, University of Durham; Helen Simpson, Professor of Economics, University of Bristol; David Cobham, Professor of Economics, Herriot-Watt University; James Reade, Lecturer in Economics, University of Reading; Jonathan Temple, Professor of Economics, University of Bristol; Elisa Keller, Lecturer in Economics and Finance, University of Durham; Christoph Gortz, Lecturer in Economics, University of Birmingham; John Fender, Professor of Economics, University of Birmingham; Michael Horvath, Assistant Professor of Economics, University of York ; Christos Kolympiris, Associate Professor of Economics, University of Bath; Jo Michell, Senior Lecturer in Economics, University of the West of England, Bristol; Roger Backhouse, Professor of Economics, University of Birmingham; Arnab Bhattacharjee, Professor of Economics, Heriot-Watt University; Pierre-Guillaume Meon, Professor of Economics, Universite libre de Bruxelles; Peter Spencer, Professor of Economics, University of York; Christian Ewald, Professor of Financial Economics, University of Glasgow; Tatiana Kirsanova, Professor of Economics, University of Glasgow; Gulcin Ozkan, Professor of Economics, University of York; Juan Paez-Farrell, Lecturer in Economics, University of Sheffield; Andrew Pickering, Senior Lecturer in Economics, University of York; Matt Cole, Professor of Economics, University of Birmingham; Nicolas Van Der Sijpe, Lecturer in Economics, University of Sheffield; Sascha Becker, Professor of Economics, University of Warwick; Roman Sustek, Lecturer in Economics, Queen Mary, University of London; Jan Fidrmuc, Senior Lecturer in Economics, Brunel University; Tim Worrall, Professor of Economics, University of Edinburgh; Paul Mizen, Professor of Economics, University of Nottingham; Frank Strobel, Senior Lecturer in Economics, University of Birmingham; Geraint Johnes, Professor of Economics, University of Lancaster; Gianni de Fraja, Professor of Economics, University of Nottingham; Ian Walker, Professor of Economics, University of Lancaster; Amailia Di Girolamo, Assistant Professor of Economics, University of Birmingham; Ethan Ilzetski, Lecturer in Economics, London School of Economics; Jill Johnes, Professor of Production Economics, University of Huddersfield; Neil Rankin, Professor of Economics, University of York; Colin Rowat, Professor of Economics, University of Birmingham; Bai Yuting, Lecturer in Economics, University of Lancaster; Andrew Mell, Career Development Fellow in Economics, University of Oxford; Alan Sutherland, Professor of Economics, University of St Andrews; Joao Rodrigues Madeira, Lecturer in Economics, University of York; Engelbert Stockhammer, Professor of Economics, Kingston University; Ozlem Onaran, Professor of Economics and Director of Greenwich Political Economy Research Centre, University of Greenwich; Jonathan Perraton, Senior Lecturer in Economics, University of Sheffield; Joeseph Pearlman, Professor of Economics, City University; William Tayler, Lecturer, University of Lancaster; Daniel Zizzo, Professor of Economics, University of Newcastle; Frank Skinner, Professor of Corporate Finance, Brunel University; Charles Goodhart, Emeritus Professor of Economics, London School of Economics; David Blanchflower, Professor of Economics, Dartmouth College; Marianne Sensier, Research Fellow, University of Manchester; Mike Danson, Professor of Enterprise Policy, Heriot-Watt University; Keith Smith, Senior Research Fellow, Imperial College Business School; Andrew Scott, Professor of Economics, London Business School; Cristiano Cantore, Senior Lecturer in Economics, University of Surrey; Robert Witt, Professor of Economics, University of Surrey; Alex Mandilaris, Senior Lecturer in Economics, University of Surrey; Santos Silva, Professor of Economics and Head of School, University of Surrey; Adi Imsirovic, Teaching Fellow in Economics, University of Surrey; Sandra McNally, Professor of Economics, University of Surrey; Jo Blanden, Senior Lecturer in Economics, University of Surrey; Guilherme Carmona, Professor of Economics, University of Surrey; Federico Martellosio,   Senior Lecturer in Economics, University of Surrey; Tom Holden, Lecturer in Economics, University of Surrey; Sarolta Laczo, Lecturer in Economics, University of Surrey; Antonio Mele, Lecturer in Economics, University of Surrey; Manthos Delis, Professor of Financial Economics, University of Surrey; Maria Iosifidi, Lecturer in Financial Economics, University of Surrey; Andy Ross,   Lecturer in Economics, Birkbeck, University of London; Ralf Martin, Assistant Professor of Economics, Imperial College Business School; Holger Breinlich, Professor of Economics, University of Nottingham; Zacharias Psaradakis, Professor of Econometrics, Birkbeck, University of London ; Yunus Aksoy, Reader in Economics,  Birkbeck, University of London ; Miguel Leon-Ledesma, Professor of Economics, University of Kent; Alexander Mihailov,   Associate, Professor of Economics,    University of Reading; Keith Pilbeam, Professor of Economics , City University, London; Chris Starmer, Professor of Economics, University of Nottingham; Simon Appleton, Professor of Economics, University of Nottingham; Hamish Low, Professor of Economics, University of Cambridge; Ethan Ilzetski, Assistant Professor of Economics, London School of Economics; Giordano Mion, Professor of Economics, University of Sussex; Sai Ding, Senior Lecturer in Economics, University of Glasgow; Jim Malley, Professor of Economics, University of Glasgow; Guido Ascari, Professor of Economics, University of Oxford; Ali al-Nowaihi, Professor of Economics, University of Leicester; Mariana Mazzucato, Professor in the Economics of Innovation, Sussex University; Abigail Barr, Associate Professor and Reader at the School of Economics, University of Nottingham;
Photis Lysandrou, Professor of Economics, City University ; Jan Toporowski, Professor of Economics and Finance, SOAS; Huw Dixon, Professor of Economics, University of Cardiff; Chryssi Giannitsarou, Lecturer in Economics, University of Cambridge; Stephanie Griffith-Jones, Emeritus Professorial Fellow, IDS, Sussex University; Charles Brendon, Lecturer, University of Cambridge; Flavio Toxvaerd, Lecturer, University of Cambridge; Nauro Campos, Professor of Economics, Brunel University; Anastasia Nesvetailova, Director, City Political Economy Research Centre, City University; Sir Richard Jolly, Emeritus Professor of Development Economics, IDS, Sussex University; Nicole Tabasso, , Lecturer in Economics, University of Surrey; Pontus Rendahl, Lecturer in Economics, University of Cambridge; Michael Lipton, Emeritus Professor, Sussex University; Daniela Gabor, Associate Professor, UWE Bristol; Neil Lancastle,Senior Lecturer in Accounting and Finance, DeMontfort University; Joanna Clifton-Sprigg, Lecturer in Economics, University of Bath; Peter Sinclair, Professor of Economics, University of Birmingham; Thijs Van Rens, Assistant Professor of Economics, University of Warwick; Liam Graham, Reader in Economics, University College London; Isaac Karalis, Teaching Fellow in Economics, University of Warwick; Ozge Senay, Senior Lecturer in Economics, University of St Andrews ; Christian Soegaard, Lecturer in Economics, University of Warwick; Beata Javorcik, Professor of Economics, Oxford University; Rick Van der Ploeg, Professor of Economics, Oxford University; Christopher Bowdler, Professor of Economics, Oxford University; David Vines, Professor of Economics, Oxford University; Patricia Rice, Associate Head and Research Fellow of Economics Department, Oxford University; Tony Venables, Professor of Economics, Oxford University; Elisa Faraglia, Lecturer in Economics, University of Cambridge; Michael Gasiorek, Senior Lecturer in Economics, University of Sussex; Peter Holmes, Jean Monnet Reader in the Economics of European Integration, University of Sussex; Sarah Maioli, Lecturer in Economics, University of Newcastle; Roxana Radulescu, Lecturer in Economics, University of Newcastle; Martin Ellison, Professor of Economics, University of Oxford; Pedro Serodio, Teaching Fellow, University of Warwick; Frances Stewart, Professor of Economics, University of Oxford; Edmund Cannon, Reader in Economics, University of Bristol; Rui Pedro Esteves, Professor of Economics, Oxford University; Andrea Ferrero, Professor of Economics, Oxford University; Ray Barrell, Professor of Economics, Brunel University and VA Research; Robert Elliott, Professor of Economics, University of Birmingham; Shaun Hargreaves Heap, Professor of Economics, Kings College London;   Stephen Hall, Professor of Economics, Deputy Pro Vice Chancellor and Head of Department, University of Leicester; Sanjit Dhami, Professor of Economics, University of Leicester; Bo Yang, Lecturer in Economics, University of Swansea; Mohamed Shaban, Reader in Economics, University of Sheffield Management School; Meryem Duygun,   Professor of Economics, University of Nottingham Business School; Peter Jackson, Professor of Economics, University of Leicester; Gregory James, Senior Lecturer in Economics, University of Loughborough; Robert Ackrill, Professor of European Economics and Policy, Nottingham Trent University; Leighton Vaughan Williams, Professor of Economics and Finance, Nottingham Trent University; Maria Garcia-Alonso, Senior Lecturer in Economics, University of Kent; Jeff Round, Lecturer in Health Economics, University of Bristol; Emmanuel Haven, Professor of Financial Economics, University of Leicester; Nigel Healey, Professor of Economics, Nottingham Trent University; John Marsh, Senior Lecturer in Economics, Nottingham Trent University; Diane Coyle, Professor of Economics, University of Manchester; Jacopo Mazza, Lecturer in Economics, University of Manchester; Geoff Harcourt, Emeritus Fellow, Jesus College, University of Cambridge; PGA Howells, Emeritus Professor, UWE, Bristol; Veronica Veleanu, Lecturer in Financial Economics, University of Surrey; Michael McMahon, Assistant Professor of Economics, University of Warwick; Kavita Sirichand. Lecturer in Financial Economics, Loughborough University; Ciro Avitabile, Senior Lecturer in Economics, University of Surrey; Alessandro Mennuni, Lecturer in Economics, University of Southampton; Raffaele Rossi, Lecturer in Economics, University of Manchester

Non-academics

Rohan Shah, economist, leading competition economics firm; Owen Barder, Vice President, Director of CGD Europe and Senior Fellow, Center for Global Development; Dr Rebecca Driver, Analytically Driven; Duncan Weldon, Head of Research, Resolution Group; Megan Greene, Chief Economist, Manulife Asset Management; George Magnus, Associate, China Centre, University of Oxford; Alex Bowen, Principal Research Fellow, Grantham Institute on Climate Change, LSE; John Springford, Senior Fellow, Center for European Reform; Sushil Wadhwani, CEO, Wadhwani Asset Management LLP; Grant Lewis; Chris Scicluna; Toby Nangle, Global Co-Head of Multi-Asset, Columbia Threadneedle Investments; Anne Pettifor, Director, Policy Research in Macroeconomics; Kate Gimblett, Financial Economist, KG Consulting and Research; Stephanie Flanders, Former Economics Editor, BBC Newsnight; Kitty Usher, Managing Director, Tooley St Research, and former Treasury Minister; Michael Grady, Senior Economist and Strategist, Aviva Investors; Simon Maxwell, Chair of the European Think-Tanks Group, Former Head of ODI; Daniel Alpert, Managing Partner, Westwood Capital LLC and Fellow, The Century Foundation; Alberto Gallo, Portfolio Manager and Head of Macro Strategies, Algebris Investments; Brenda Kelly, Head Analyst, London Capital Group; Erik Nielson, Global Chief Economist, Unicredit; Kit Juckes, Strategist, Societe General; Simon Tilford, Deputy Director, Centre for European Reform.

Names added after Times Publication:

Cheryl Jones, Manchester Centre for Health Economics; Peter Smith, Professor of Economics, University of York; Paul McCrone, Proessor of Health Economics, Kings College; Shealagh Ogilvie, Professor of Economic History, University of Cambridge; Andrew Watt, Director, Macroeconomic Policy Institute (IMK) ; Chris Colclough, Emeritus Professor of Education and International Development, University of Cambridge; Marco Ercolani, Senior Lecturer in Economics, University of Birmingham; Leigh Caldwell, Cognitive Economist, Director, The Irrational Agency; Emmanouil Mentzakis, Associate Professsor of Economics, University of Southampton; Hector Calvo-Pardo, Reader in Economics, University of Southampton; Brit Grosskopf, Professor of Economics, University of Exeter; Spyros Galanis, Associate Professor of Economics, University of Southampton; George Bratsiotis, Senior Lecturer, University of Manchester; Hamid Sabourian, Professor of Economics and Game Theory, University of Cambridge.

 

UCL names added after Times publication:

Professor Orazio Attanasio; Professor Sir Richard Blundell; Professor Antonio Cabrales; Professor Wendy Carlin; Professor Pedro Carneiro; Dr Parama Chaudhury; Professor Andrew Chesher; Dr Gabriella Conti ; Professor Martin Cripps; Dr Wei Cui; Professor Mariacristina De Nardi; Professor Eric French; Professor Raffaella Giacomini; Professor Antonio Guarino; Dr Hedvig Horvath ; Professor Steffen Huck; Professor Philippe Jehiel;Dr Cloda Jenkins; Professor Patrick Kehoe; Professor Dennis Kristensen; Professor Guy Laroque; Dr Valerie Lechene; Dr Attila Lindner; Dr Jeremy Lise; Professor Stephen Machin; Dr Konrad Mierendorff; Dr Lars Nesheim; Dr Aureo De Paula; Dr Malcolm Pemberton; Professor Fabien Postel-Vinay; Professor Ian Preston; Professor Imran Rasul; Professor Morten O. Ravn; Professor Jean-Marc Robin; Dr Adam Rosen ; Professor Uta Schoenberg;Professor Vasiliki Skreta; Dr Christian Spielmann; Professor Stephen Smith; Dr Vincent Sterk; Dr Michela Tincani; Dr Marcos Vera-Hernandez; Dr Donald Verry; Dr Frank Witte; Professor Richard Disney.

LSE names added after publication:

Professor Oriana Bandiera; Professor Erik Berglof; Professor Timothy Besley; Dr Mohan Bijapur; Professor Robin Burgess; Professor Leonardo Felli; Professor Luis Garicano; Dr Vassilis Hajivassiliou; Dr Keyu Jin; Dr Camille Landais; Dr Jonathan Leape; Professor Gianmarco Ottaviano; Professor Gerard Padro I Miquel; Professor Martin Pesendorfer; Dr Marcia Schafgans; Dr Pasquale Schiraldi; Dr Johannes Spinnewijn; Professor Lord Nicholas Stern; Dr Daniel Sturm; Professor John VanReenen; Professor Silvana Tenreyro;Dr Shengxing Zhang.

 

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Jacob Rees Mogg and ‘firing’ Mark Carney

Jacob Rees Mogg, on the Treasury Committee, which holds the Bank of England to account, has called for Mark Carney to be ‘fired’ for his handling of the discussion of the risk of a short term shock to the economy in the event that the country votes to Leave the EU.

This is a serious error.

For starters, Carney, as he ably explained on the Marr show on Sunday, was speaking entirely within the confines of his remit.  The MPC have at their disposal a tool which acts with long and variable lags.  And so they have to be prepared to act to head off future risks, of which the risk of Leaving is a clear example.  Not only that, but decades of unsuccessful central bank opacity have convinced many – Carney notable in this regard for being so modern – that being open about these risks helps others avoid them [anyone about to roll over their mortgage out there?] and helps us hold him and his fellow MPC members to account.

Rees Mogg, in my opinion, ought to reflect on the role the TC itself has in nurturing central bank independence, which is a delicate and still somewhat unwritten thing.  The legislation allows for many escape clauses that could lead an erratic Chancellor to take back control of monetary policy, and ensuring that such clauses won’t be triggered petulantly is part of the job of TC members.

In this regard, his wish to fire the Governor will look to many [it does to me] itself like a politically motivated and spurious demand.  And it the sort of thing that would, if the habit spread, lead us to start forecasting future inflation based on the weight of different factions in Treasury Committee numbers.  It is a decisive break from the hope that committee membership of this sort be governed by a degree of non-partisanship and technocracy.

What are we meant to infer from this demand?  That it is Vote Leave policy?  That if there were a vote to Leave, and a change of guard at the top of the Conservative Party, that there would be some energy put into expediting the early departure of Mark Carney?

My only criticism of Mr Carney is this.  That his position was made more uncomfortable by having strayed from his remit back in October 2015 with the report on the EU that waxed so lyrically about some of the longer term benefits of membership.  And also that he could have been more frank about how the balance of risks weigh if we Leave.  As I wrote previously, I’m almost certain that privately the MPC and its staff will be thinking that the upside push on inflation won’t matter:  i) the supply side effects are small and slow-moving and ii) the exchange rate fall will be looked through.  There are more remote scenarios in which this won’t hold, but those are not those that were being put centre stage by Mr Carney last week.

Not being more open about the nature of the Leave risk detracts from the admirable direction of travel regarding transparency.  And it would also fit better with the declared strategy of explaining that they are ‘simply telling it how it is, uncomfortable though it may be.’  Why did they do it?  I’ve no idea.  Perhaps because it would signal clearly that rates were not likely to rise as the Chancellor had previously warned and that would be complicated for the Bank?

 

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The Bank of England’s Brexit Press Conference

The May Inflation Report was understandably dominated by the debate about the economics of Brexit.

I thought that the BoE ducked a chance to be transparent about the consequences of a vote to Leave.  It chose to condition its forecast on a vote to Remain.  Carney linked this to a long-standing – but actually not always wholly adhered to – policy of ‘conditioning on government policy’.

Taking Carney’s words at face value, the Bank have not even produced a forecast conditioned on a Leave vote, so there was no forecast to communicate.

I find this hard to defend.

Charles Evans of the Fed’s FOMC spoke earlier in the year about how, in the vicinity of the zero bound, an increase in the uncertainty about the future state of the world warrants a precautionary loosening.

The likelihood of being wrong about the future increases on either side. But the costs for your goal variables increases disproportionately on the downside, because there is not ample room to loosen.  Following a policy like this entails contemplating an overshoot on your most likely view, in order that on average you hit your target.  How much of a loosening is required would of course require one to forecast without conditioning on one particular outcome.

We can take the MPC’s decision as one reflecting a view that one can dismiss out of hand this precautionary argument.  But that is also hard to defend if you have not debated it and mounted a rebuttal.  Most of the machinery that Evans uses [modern macro models, importance of expectations….] our MPC also uses.  Where do they differ on this point and why?

Carney described the implications for policy of a Leave vote as being ambiguous.  There are forces pushing both ways, he said.  Sterling would fall, pushing up import prices for a while, and the shock to confidence would constrain the supply side as investment fell.  But here I felt this analysis was less than frank.  The MPC have rightly largely been looking through the effects of the appreciation on headline inflation over the last two years.  One would expect and hope that they do the same (in reverse) following a drop in Sterling in the event of a Leave vote.  And the supply side effects alluded to are likely to be very small and slow-moving;  the counterfactual path of the capital stock would only be fractionally different between Leave and Remain votes over the forecast horizon.  It seems to me very far-fetched that the sign of a likely interest rate change is ambiguous.

Vote Leave were furious with Carney for intervening in the way that he did.  But all of what was said on Thursday was very squarely within the MPC’s remit.  Some of their chagrin might have been avoided, however, if the Bank had not already overreached its mandate with the publication earlier of the BoE’s report on the implications of EU membership for its concerns.  That report included much waxing lyrical about the benefits of longer term membership [“dynamism” etc], not relevant to the Bank’s concerns, and that could have been avoided with a report with a narrower focus.

Part of the Leavers ire is about competence, namely that Carney should avoid sparking a ‘self-fulfilling’ currency crisis, and should have instead simply stated that the BoE would do whatever it takes.  I am firmly on Carney and the MPC’s side here.  Such risks are balanced by the risk that markets take fright in the face of apparent complacency.  And are anyway trumped by, and perhaps even reduced by being open, transparent and frank about what lies ahead.

It’s a blogging ambition to try to go a while without mentioning the BoE publishing interest rate forecasts, but this will have to wait.

Not having such a forecast is particularly troublesome at these times.  We are presented with a forecast conditioned on Remain, but that results from an interest rate path which is the market’s forecast of what will happen to interest rates balancing the probabilities of Remain and Leave votes!

It is not as bad as all that, since Carney presented with the now customary verbal forward guidance.  But still, what is so beneficial about concealing their interest rate forecast that justifies jumping through hoops like this?  At some point I hope that those who directly hold the Bank to account step in and ask them to think again.

Finally, Carney was asked about the extent to which the MPC are using judgement to lean on their model forecast.  We got confirmation that they are [not a surprise, this always happens, and rightly so] but not by how much.  As I’ve suggested before, the Bank should be transparent about this, making its model and data available for all to see, promptly, and so that how firmly the MPC are overwriting the model can be scrutinised and interrogated.  It is part of helping everyone hold them to account, understand their forecasting tools, and their own forecasting acumen.

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Blog for Prospect: IDS, Brexit and the have-nots

IDS’ speech got my goat.  See here.

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Economists against Brexit

Together with Paul Levine and Simon Wren Lewis, I coordinated a letter to try to gauge the extent of feeling towards the idea that on economic grounds alone, the UK should Remain in the EU.

Simon reproduces the letter on his blog.  The letter appears in today’s Times, signed by 196 [214 at 21.5.16] economists in academia and the private sector, and with a follow up news story by Philip Aldrick.

We did not start the letter lightly.  Many people we approached, vociferous in their advocacy for Remain, were equally vigorous in dismissing letters as ridiculous or futile.  Aren’t the papers full of them these days?  What about the letter of 364!  How wrong that turned out to be!  [I happen to disagree with that].  Others pointed out that if economists spoke out, we’d cause a backlash with those resentful at being told how to vote.

Speaking for myself, it seems like a fair way to convey opinion from those whose voice is not that often heard, and whose advice can’t usually be sought [though social media is eating away at that barrier].  There seems little harm in offering advice:  it can be taken or left.  Bending to worries about economist fury would seem to me to lead to a nihilist world in which no-one who knows anything can impart what they know, and the mass of those who don’t are left to vote on instinct, or their experience of the University of Life.

Canvassing colleagues unearthed a large constituency of those who wanted to sign but could not;  there are many in think tanks, or with responsible positions on funding bodies, or working as economists in the private sector, whose roles constrain them from putting their names to these letters:  or constrain them, in other words, from giving advice of this sort.  Perhaps this silencing achieves other, greater benefits, but the extent of it took me by surprise.  I’d guess that our list of signatories would be about 10% longer in a world without these constraints.

Mervyn King went on the record as saying that he thought that both sides of the debate had been prone to “exaggerate”.  But our signatories seem to differ on that, feeling that the analysis of the net benefits of Remaining in the EU are about right.

A full list of signatories of the Times letter, updated to include those who added their names after the date of publication is here.

The list includes 18 new names that arrived after the publication deadline.

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Economists against Brexit letter

Oh no, not another one, we hear you groaning.  And well you might.

However, prompted by the tightening in the polls, and the publicity around the ‘Economists for Britain’ and ‘Economists for Brexit’ groups, Paul Levine, Simon Wren-Lewis and I are organising a letter for economists to express their support for a vote to Remain, on economic grounds, on June 23rd.

If you have not seen the letter, and you think you might want to sign, write to one of us to get it.  [Post your email as a comment to this post if you don’t know how to get us].

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