Blogs

The NIESR blog is a forum for Institute research staff to provide an informed, independent view on current economic issues and recent NIESR research. The views expressed here are those of the authors, and are not necessarily those of the Institute.

Prof Jagjit S. Chadha

Posted: 31 March, 2017 - 11:55 with: Comments

Why does long growth or what economists used to call secular trend matter? It is essentially about compound interest. At a growth rate of 2% per year, income will double every 35 years. Over the 315 years from 1700 to 2015 in the UK we have reasonable or passable data for Britain stating that income has grown at an average rate of 1.69%, which implies a nearly two hundred-fold increase in income (widget production) over this long period. 

Dr Angus Armstrong

Posted: 28 March, 2017 - 17:36 with: Comments

Article 50 may lead to a decisive fork in the road for the UK. The final Brexit agreement “must take account of the framework for its [the UK’s] future relationship with the EU.” Therefore, the government has two years, realistically eighteen months, to redefine our international relationships. These relationships have a direct correspondence on our economy, creating winners and losers. The government may have to choose between two very different paths.

Prof Jagjit S. Chadha

Posted: 24 March, 2017 - 11:08 with: Comments

The UK has often been described as being an economically divided country. Initially this divide was related to the decline of traditional primary (for example, mining) and secondary (manufacturing) industries and the rise of the service sector in London, which increasingly provided legal, financial, accounting and educational services to the rest of the world. Oddly enough both sets of industries, whether in decline or still growing by the late 20th century, had strong roots in the industrial revolution. This simple observation tells us that we cannot know today which sorts of industries will necessarily thrive into the 21st century: Hoxton hipsters making furniture might dominate the pricing of credit default swaps.

 

Prof Jagjit S. Chadha

Posted: 17 March, 2017 - 11:42 with: Comments

First let's ask what explains household debt? Well if the household formulates a rational plan that conditions on its lifetime budget constraint, over its lifetime debt should be zero. With many overlapping households we might expect to observe debt in a young economy when the proportion of young outweighs the old.

Dr Angus Armstrong

Posted: 14 March, 2017 - 08:51 with: Comments

Brexit need not have led to a second Scottish referendum. But the UK Government’s policy of ever harder Brexit, without so much as a vote, raises issues of political legitimacy north of the border. The Scottish Government faces daunting economic hurdles to convince its electorate. But if we have learned one thing over the last year, the feeling of exclusion can override economic logic.

Prof Jagjit S. Chadha

Posted: 10 March, 2017 - 14:55 with: Comments

The resilience of output following the referendum has been most welcome and has led to many forecasters gradually cranking up their central views for 2017.  On Wednesday, the OBR plumped for a central case of 2% this year compared to 1.4% in November.  The Institute itself also published an upward revision in February and thought that output would be most likely to grow by some 1.7% this year.  But it is the composition of that growth and the risks present a great concern.

Prof. Simon Wren-Lewis

Posted: 8 March, 2017 - 16:36 with: Comments

For the last several budgets/autumn statements I have agreed to write an immediate response for some media outlet, and have therefore felt obliged to watch either the speech itself, or the media reports on the day. The good news is that no one has asked this year, and so I can ignore all budget coverage until tomorrow.

Prof Jagjit S. Chadha

Posted: 3 March, 2017 - 11:59 with: Comments

In the week before the Spring budget, we are all supposed to get excited about the odd change in tax rates or the TV license fee. And worry about the excise duties on various viscous hydrocarbons. In fact, what we ought to be worried about will probably mostly be missed by commentators: that is whether the government is meeting its obligation to reduce risk.

Johnny Runge

Posted: 21 February, 2017 - 15:47 with: Comments

The problem of teacher shortages is rarely out of the news. Only this week the Education Select Committee concluded that the government is failing to take adequate measures to tackle "significant teacher shortages" in England. Gaps in the classroom are being filled by supply teachers, some hired by agencies. Yet, while agency staff usage and spending in the NHS frequently attract headlines in the national media, much less attention is paid to the spiralling costs of agency supply teachers in England’s state schools.

Nathan Hudson-Sharp

Posted: 20 February, 2017 - 16:21 with: Comments

It has been said many times that the NHS is at breaking point. Talk of bed shortages, wasted resources, understaffing and missed targets saturate the media. A Government Adviser has even said recently that hospitals are in a ‘state of war’.  High rates of use of agency workers are seen as a symptom of a sick NHS but the reasons for their spiralling use are poorly understood. New research by the National Institute of Economic and Social Research (NIESR) set out to explain why agency workers seem to be keeping the NHS alive. The research diagnoses the root causes of high agency spending, revealing that  agency working is only the symptom of a much larger, chronic problem around NHS staffing.

Prof Jagjit S. Chadha

Posted: 17 February, 2017 - 13:12 with: Comments

There is a growing sense that globalisation, by equalising the international price for labour and for capital, has acted to reduce both real wages and real interest rates – the former means that labour earns less but the latter tends to inflate asset prices. This wedge in the return to capital and labour may help us understand why income and wealth inequality has increased in the recent past.

Prof Roger Farmer

Posted: 8 February, 2017 - 17:51 with: Comments

Last year, I was invited to present a keynote address to the 20th annual conference of the FMM Research Network on Macroeconomics and Macroeconomic Policies, “Towards Pluralism in Macroeconomics”, held in Berlin on October 20th – 22nd.

Graham Hacche

Iana Liadze

Posted: 7 February, 2017 - 10:11 with: Comments

The February 2017 National Institute Economic Review discusses the possible consequences for the US economy of the significant changes in economic policy promised by the new US administration. 

Prof Alex Bryson

Lucy Stokes

Posted: 3 February, 2017 - 12:41 with: Comments

In yesterday’s blog post we discussed findings from our research on older workers and the workplace. Our focus was on the experiences of older workers, but today we consider the employer perspective. The fact that older individuals are remaining in work is good news for the individuals concerned, since working is associated with higher incomes and better health.  It is also good for the Exchequer, increasing the tax take.  But is it good for employers?

Prof Alex Bryson

Lucy Stokes

Posted: 2 February, 2017 - 10:24 with: Comments

More and more older individuals are working. It’s good news that more people are working longer, with potential benefits for both individuals and the economy. But employment rates still drop notably when people reach their 50s and 60s.

Professor Iain Begg

Posted: 1 February, 2017 - 11:09 with: Comments

Rules have become an increasingly prominent – even defining – feature of EU economic governance as a result of the various reforms undertaken to resolve the euro crisis. There are now rules on fiscal deficits and debt levels, set out in the Stability and Growth Pact (SGP), and an EU Directive required Member States to enshrine fiscal rules in their national legal order.

Dr Angus Armstrong

Posted: 30 January, 2017 - 10:29 with: Comments

A basic principle in economics is that there is no free lunch. To get something we want, we have to give up something we like. The Prime Minister made crystal clear in her Lancaster House speech last week that Brexit is about restoring parliamentary sovereignty. What she failed to make clear was what we will be giving up.

Dr Monique Ebell

Posted: 27 January, 2017 - 09:26 with: Comments

Theresa May's 12 point plan for negotiating with the EU included two key announcements regarding trade: the UK will not seek membership of the single market, and the UK wishes to abandon the EU’s common external tariff, in order to be free to negotiate trade agreements with third countries.

This blog provides a range of projected impacts on UK trade of these policies.

Prof Jagjit S. Chadha

Posted: 20 January, 2017 - 13:09 with: Comments

How does a government reduce its public debt burden relative to national income, which is what I mean by a fiscal consolidation? There are a number of obvious instruments that might bear immediate fruit: reduce the flow of government deficits by increasing taxes or reducing government expenditure or to develop expenditures that increase output by more than the increase in the deficit. The latter is of course the search for the holy grail of a multiplier greater than one and the former is often termed 'austerity'.

 

Dr Angus Armstrong

Posted: 16 January, 2017 - 18:11 with: Comments

At noon today, the Prime Minister will set-out the government’s strategy for Brexit. Mrs May will no doubt repeat that Brexit means Brexit. But the important question is what will be the UK’s future economic arrangement with the EU? The Prime Minister will try and keep her options open, but the trade-offs involved seem to make a ‘Hard Brexit’ inevitable 

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