Publications
Type: National Institute Economic Review
In this note, we argue that a considerable part of the explanation for the benign wage growth in the advanced world is the rise in underemployment. In the years after 2008 the unemployment rate understates labour market slack. Underemployment is more important than unemployment in explaining the...
Type: National Institute Economic Review
In housing affordability levels and volatility, there could hardly be a greater contrast than between the UK and Germany. Differences in history, institutions and policies are explored in this paper. Residential housing supply has been far more expansionary in Germany and mortgage credit more...
Type: National Institute Economic Review
This paper summarises the evidence from recent research relating to the British Planning system’s impact on the supply of development. Planning serves important economic and social purposes but it is essential to distinguish between restricting development relative to demand in particular places to...
Type: National Institute Economic Review
This article summarises the long-run decline in housing affordability in England and suggests this is substantially attributable to shortfalls in housing supply. Public attitudes to housing have become increasingly pro-development in recent years and the current policy framework – summarised in the...
Type: National Institute Economic Review
The paper discusses the many reasons why housing policy can appear to be both incoherent and ineffective - with too many Departments involved each with different objectives and a plethora of policies pulling in different directions. Drawing on earlier research findings the paper discusses three...
Type: National Institute Economic Review
Financial stability reports published by central banks and commentaries by international agencies such as the International Monetary Fund (IMF) and Bank for International Settlements (BIS) frequently highlight the high level of debt (private sector or public sector or both) as an important risk...
Type: National Institute Economic Review
Last year the global economy expanded at its fastest pace since 2011. We expect global growth to continue at a similar rate in 2018 and 2019.
We expect the pace of global economic expansion to slow to around 3.5 per cent a year in the medium term unless productivity growth picks up substantially....
Type: National Institute Economic Review
The UK economy is facing an unusual level of uncertainty because of Brexit. This uncertainty primarily stems from the yet to be defined relationship between the UK and the EU but also from the economy’s response to the new framework once it emerges. The UK government’s White Paper, which set out...
Type: National Institute Economic Review
The housing market is a source of much comment and tension in the UK. Many commentators and policymakers have got into the habit of describing the market as ‘broken’, indeed we take our title from the White Paper issued by the then Department for Communities and Local Government in 2017. In our...
Type: National Institute Economic Review
In his Spring Statement, the chancellor said that he saw light at the end of the fiscal tunnel. We are afraid that this will turn out to have been an illusion. While public borrowing has been reduced to sustainable levels, our analysis of the prospects for the public finances points to severe...
Type: National Institute Economic Review
This paper introduces a special issue of the Review on how the National Institute Global Econometric Model (NiGEM) is being used to navigate uncertain times. NiGEM is the leading global macroeconomic model, used by both policy-makers and the private sector across the globe for economic forecasting...
Type: National Institute Economic Review
There is a strong case for boosting public investment in many countries based on identified country-specific structural weaknesses and the relatively low levels of such investment. This paper analyses the potential macroeconomic benefits of increased public investment using simulations on NiGEM....
Type: National Institute Economic Review
For a large number of countries, we augment the specification of import demand in NiGEM by accounting for different import contents of individual expenditure components. Three examples illustrate that these changes have important implications for model outcomes. In the case of the recently enacted...
Type: National Institute Economic Review
Exchange rate fluctuations have been particularly large since mid-2014, displaying divergent developments across the period. The nominal effective exchange rate of the dollar has appreciated by 15 per cent since June 2014, masking a 25 per cent appreciation to December 2016 followed by a...
Type: National Institute Economic Review
We modify NiGEM in order to study the macroeconomic effects of imposing import tariffs in the US under different assumptions regarding the long-run price setting behaviour of exporters. Overall, the macroeconomic implications in the US resemble the impact of a cost shock or adverse supply shock as...
Type: National Institute Economic Review
We analyse the costs of Brexit. The results show that by 2030 a hard Brexit would reduce cumulative GDP growth by 18 percentage points compared to a situation where the UK continued its EU membership. The economic damage in our FTA and soft Brexit scenarios is less severe than in our hard Brexit...
Type: National Institute Economic Review
The Irish economy has recovered at an impressive pace from the economic and financial crisis that lasted from 2008–12. Nonetheless, as a small open economy with some lingering vulnerabilities from the recent crisis, the economy remains heavily exposed to potential adverse shocks. In this paper, we...
Type: National Institute Economic Review
Last year the global economy expanded at its fastest pace since 2011. We continue to expect to see slightly faster global growth this year with momentum being carried forward. We expect growth to continue to be broadly based.
With some advanced economies appearing to be operating at close to full...
Type: National Institute Economic Review
We have revised lower our GDP forecast for 2018 to just under 1.5 per cent mainly due to weak performance in the first quarter. But the slowdown is likely to be temporary.
The Commentary in this Review builds a case for higher government spending. We have, as a result, allowed for higher total...
Type: National Institute Economic Review
Our new "virtual issue" of our Economic Review focussing on Productivity
Type: National Institute Economic Review
In England, teacher shortages have worsened in recent years and one contributor is the declining rates of retention among newly qualified teachers (NQTs). We employ a method developed in the health-statistics literature to identify schools that both recruit an unusually high level of NQTs and lose...
Type: National Institute Economic Review
There is a perception among some commentators and policy analysts that leadership and managerial practices in private schools are superior to those in state schools. Analysing a survey of workplaces in Britain, we find little evidence to support this contention when examining the prevalence of...
Type: National Institute Economic Review
In recent years, governments have spent considerable time, effort and political capital on education reforms in the expectation that pupil attainment will improve.Since the mid-1990s reforms in England have focused on school governance issues, notably the weakening of local government control over...
Type: National Institute Economic Review
It might only be just a little too strong to argue that the housing market dominates our national life. Whilst economists, if they consider housing at all, would think of the consumption of housing services as another aspect of the basket of goods and services bought, like clothing or food, most...
Type: National Institute Economic Review
GDP is forecast to grow by nearly 2 per cent this year and in 2019. Our forecasts have been revised higher since November.
Annual consumer price inflation peaked at 3 per cent in the final quarter of 2017 and is forecast to ease back to the target rate of 2 per cent over the next eight quarters.
We...
Type: National Institute Economic Review
The global economy is expanding at its fastest pace since 2011. With momentum expected to carry into 2018, we have revised up our forecasts for growth in all of the major economies and regions.
But with many economies operating at close to full capacity, some slowdown in the pace of expansion is...
Type: National Institute Economic Review
A major part of the 2010–15 UK government’s education reforms in England was a focus on the curriculum that pupils study from ages 14–16. Most high profile was the introduction of the English Baccalaureate (EBacc) performance measure for schools, incentivising study of “subjects the Russell Group...
Type: National Institute Economic Review
We explore the variation in pupil attainment at the end of secondary schooling in England. The paper links data on all schools and all pupils within these schools to analyse the role of the school in accounting for this variation. We analyse a number of different indicators of pupil attainment...
Type: National Institute Economic Review
In this note, we focus on underemployment as a potential cause of lower wage growth, which itself may have deeper causes, but which has, we would argue, demonstrably changed since the 2008 recession. The gap between our measures of the number of additional hours required by those who want more...
Type: National Institute Economic Review
This is a new 'virtual' special issue of our Economic Review. Focusing on the financial crisis, it examines the roots and evolution of the crisis and lessons learned in the last decade.
Type: National Institute Economic Review
We analyse TFP growth in the US business sector using a basic unobserved component model where trend growth follows a random walk and the noise is a first order autoregression. This is fitted using a Kalman-filter methodology. We find that trend TFP growth has declined steadily from 1.5 to 1.0 per...
Type: National Institute Economic Review
The UK’s automotive industry has been one of the ‘star performers’ of the UK economy in recent years – unlike most other manufacturing sectors. Output has increased by over 60 per cent since 2010 and there has been over £8 billion worth of investment in the industry in the past five years. The...
Type: National Institute Economic Review
This paper considers two aspects of this question. First, Brexit has already induced a devaluation of sterling of around 14 per cent since June 2016, which has started to work through to consumer prices: between June 2016 and July 2017 consumer prices increased by around 2.5 per cent. Second, while...
Type: National Institute Economic Review
This paper studies local economic impacts of the increases in trade barriers associated with Brexit. Predictions of the local impact of Brexit are presented under two different scenarios, soft and hard Brexit, which are developed from a structural trade model. Average effects are predicted to be...
Type: National Institute Economic Review
The value of exports to the domestic UK economy does not equal gross export flows, as some of the value-added within UK exports may have been generated abroad. For key business and financial service industries we present new and initial estimates giving a lower bound for the value-added component...
Type: National Institute Economic Review
The past 25 years have been characterised by a surge in international trade as economies have become increasingly inter-linked. In many advanced economies this surge has been associated with increased import competition from lowwage economies. This paper explores the effects of such competition on...
Type: National Institute Economic Review
While there is a broad understanding of the benefits to globalisation in the aggregate, attention has only recently begun to shift towards its distributional consequences. Regardless of the size of the benefits to the entire economy of increasing international trade, there may be winners and losers...
Type: National Institute Economic Review
Having been one of the fastest growing advanced economies ahead of the EU referendum in June 2016, the UK economy is now beginning to slow as others pick up the pace (figure 1). The UK economy is estimated to have grown by 1.5 per cent in the year to the third quarter of 2017. This growth rate...
Type: National Institute Economic Review
GDP is forecast to grow by around 1½ per cent this year and in 2018. Our forecasts have been revised lower since August.
Annual consumer price index inflation peaks at 3.2 per cent in the final quarter of this year before easing back to the target rate of 2 per cent in the second half of 2019. The...
Type: National Institute Economic Review
The strengthening and broadening of the global economic recovery are on track, and the revisions to our August forecast are minor.
But global growth this year and next seems likely to be as good as it gets. The medium-term outlook is still for growth below pre-crisis rates.
While short-term risks...
Type: National Institute Economic Review
The paper looks at the ‘new normal’ in so many of the world’s central banks, and specifically the UK. It examines the position of the monetary policy framework, instrument settings, the underlying models, unconventional policy measures, real interest rates, and the interface with macroprudential...
Type: National Institute Economic Review
A defining feature of (at least) the last three general elections has been the emphasis placed on each political party’s fiscal credibility and their ability to deliver “sound public finances”. Applying the logic of household book-keeping, balancing the fiscal budget is said to capture such...
Type: National Institute Economic Review
Economists understand that a fit for purpose policy regime requires a reliable general equilibrium model of the system in question and a well specified description of the objectives that the policymaker is trying to pursue. The current financial stability regime has neither and without these...
Type: National Institute Economic Review
The financial crisis has led to a change in the mix of capital and labour employed in the UK and a sharp decline in total factor productivity. This has meant that labour productivity has not recovered to any great degree since the financial crisis. We explore the role of overall and sectoral...
Type: National Institute Economic Review
While there may be an important, but transitory, cyclical component in the poor performance of the past decade, we will emphasise the secular forces: the impact of demographic structure and innovation. We draw on the empirical and theoretical work reported in Aksoy, Basso, Smith and Grasl (2015),...
Type: National Institute Economic Review
I discuss six tools available to monetary policy makers. Three of these have been used since the inception of central banking.Three are new and were introduced in the aftermath of the 2008 financial crisis. I argue that, when the UK Monetary Policy Committee raises the interest rate, it should...
Type: National Institute Economic Review
This paper argues that the Bank of England’s independence in monetary policy has been compromised as a result of quantitative easing (QE) and makes practical suggestions for restoring it as far as possible, by transferring the gilts that the Bank has bought to the Debt Management Office of the...
Type: National Institute Economic Review
GDP is forecast to grow by 1.7 per cent this year and by 1.9 per cent next year.
Annual consumer price index inflation peaks at 3.0 per cent in the last quarter of this year before easing back to the target rate of 2 per cent in the final quarter of 2019.
We have brought forward the timing of the...
Type: National Institute Economic Review
Forecast for world GDP growth in 2017 has been revised up to 3.6 per cent, which would be the fastest growth in six years. Growth projections for 2018 and the medium term are unchanged, at 3.6 and 3.4 per cent, respectively. Inflation forecast has nevertheless generally been revised down slightly....
Type: National Institute Economic Review
The financial crisis started ten years ago when BNP Paribas closed three funds in August 2007, temporarily as it turned out, when they argued that it was no longer possible to value accurately the portfolios of assets and liabilities. From that date interbank markets froze (figure 1) and to some...
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