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Author's Name: Chris Edmond
Date: Tue 12 Feb 2019

Chris Edmond

Professor Chris Edmond

Chris Edmond is Professor of Economics at the University of Melbourne. His main research interests include the implications of asset market frictions for the conduct of monetary policy and the implications of product market frictions for resource allocation, aggregate productivity, and the gains from international trade. His work has been published in journals such as the American Economic Review, the Quarterly Journal of Economics, the Review of Economic Studies, the Journal of Monetary Economics, and the Journal of Economic Theory. He studied economics at the University of Queensland and received his PhD from UCLA. He has also taught at NYU Stern and at Harvard University. In 2013 he won the Economic Society of Australia’s “Young Economist Award”.

Subject Area Expertise

Macroeconomics; Monetary Economics; International Economics.

Website

http://chrisedmond.net/

 


Responses (17)


Wage freeze for economic recovery

Poll 39

"A freeze in the minimum wage will support Australia's economic recovery"

Photo credit: Wes Mountain/The ConversationCC BY-ND 

 

Disagree

7

As we come out of the more "exotic" lockdown-influenced phase of the crisis into the more "conventional" phase of the crisis, the main thing holding back job creation is *demand*. If business cash flow increases, jobs will follow. A freeze in the minimum wage won't help on this front, it might well hurt. To be clear, the usual economic arguments against a minimum wage are implicitly *full-employment* arguments, whatever else one might think about those arguments (and the vast empirical literature on the employment effects of the minimum wage) those circumstances clearly do not apply right now.


Social Distancing Measures, May 2020

Poll 38

"The benefits to Australian society of maintaining social distancing measures sufficient to keep R<1 for COVID-19 are likely to exceed the costs"

 

Strongly agree

9

Australia will be better off with policies that keep R<1. We need to always remember that the choice is not between a deep recession or a public health catastrophe. It is a choice between 1) a deep recession vs. 2) a deep recession *and* a public health catastrophe - as in the US, UK, Italy etc. The best prospects for the economic recovery involve comprehensively beating the pandemic, eradication or something close to it. Think of it as an investment that pays off in the future. Absent near-eradication or a vaccine, lifting social-distancing restrictions will not let the economy bounce back to near-normal because people, fearing for their health, will still refrain from many kinds of economic activity. They still won't go back to bars and restaurants at normal rates. Low-margin businesses will still struggle to be viable. In other words, this approach risks the worst of all worlds, compromising our public health goals and at the same time not getting a proper economic recovery. An analogy from macroeconomics may help. Friedman and Phelps argued that although there may appear to be a short-run Phillips curve tradeoff between unemployment and inflation, there is no such trade-off in the long run. Attempts to keep unemployment low at the price of higher inflation simply lead in the long run to more inflation and unemployment that ends up being no lower. In a similar way, there is no long run trade off between public health and the health of the economy in responding to the COVID-19 crisis.


Wage freeze for economic recovery

Poll 39

"A freeze in the minimum wage will support Australia's economic recovery"

Photo credit: Wes Mountain/The ConversationCC BY-ND 

 

Disagree

7

As we come out of the more "exotic" lockdown-influenced phase of the crisis into the more "conventional" phase of the crisis, the main thing holding back job creation is *demand*. If business cash flow increases, jobs will follow. A freeze in the minimum wage won't help on this front, it might well hurt. To be clear, the usual economic arguments against a minimum wage are implicitly *full-employment* arguments, whatever else one might think about those arguments (and the vast empirical literature on the employment effects of the minimum wage) those circumstances clearly do not apply right now.


Professional Accreditation of Economists - March 2019

Poll 36

Proposition 1: "Professional accreditation for the economics profession would attract more people to economics as a career."

Proposition 2: "The benefits of professional accreditation for current and prospective economists would exceed any possible costs"

 

Part 1 - Disagree

8

Part 2 - Disagree

9

This is a silly idea.


Royal Banking Commission (II) - February 2019

Poll 35

"There is no way to significantly increase the degree to which Australian retail banks act in the interests of consumers."

 

Strongly disagree

8


Congestion pricing - November 2018

 

Agree

8

Agree, but it really depends which taxes are being cut. To my mind a better policy would be for the revenue raised from such congestion charges to be rebated to households in a progressive manner (since the burden of such congestion charges falls disproportionately on those with low incomes who tend to have fewer margins of adjustment).


Social Distancing Measures, May 2020

Poll 38

"The benefits to Australian society of maintaining social distancing measures sufficient to keep R<1 for COVID-19 are likely to exceed the costs"

 

Strongly agree

9

Australia will be better off with policies that keep R<1. We need to always remember that the choice is not between a deep recession or a public health catastrophe. It is a choice between 1) a deep recession vs. 2) a deep recession *and* a public health catastrophe - as in the US, UK, Italy etc. The best prospects for the economic recovery involve comprehensively beating the pandemic, eradication or something close to it. Think of it as an investment that pays off in the future. Absent near-eradication or a vaccine, lifting social-distancing restrictions will not let the economy bounce back to near-normal because people, fearing for their health, will still refrain from many kinds of economic activity. They still won't go back to bars and restaurants at normal rates. Low-margin businesses will still struggle to be viable. In other words, this approach risks the worst of all worlds, compromising our public health goals and at the same time not getting a proper economic recovery. An analogy from macroeconomics may help. Friedman and Phelps argued that although there may appear to be a short-run Phillips curve tradeoff between unemployment and inflation, there is no such trade-off in the long run. Attempts to keep unemployment low at the price of higher inflation simply lead in the long run to more inflation and unemployment that ends up being no lower. In a similar way, there is no long run trade off between public health and the health of the economy in responding to the COVID-19 crisis.


2016 US Election - November 2016

Poll 13

"Hillary Clinton is likely to be the superior US presidential candidate for the Australian economy and for Australia."

 

Strongly agree

9

I believe that Trump would be an unmitigated disaster for the US and the global economy. I can't see any realistic scenario by which Australia would benefit from such a calamity. I truly hope that Trump is resoundingly defeated on Nov 8. That this dangerous, appalling, unstable individual has won the Republican primary and has come so close to winning the presidency fills me with dread.


Economics teaching - micro before macro - February 2017

Poll 15

"It is more effective to teach an introductory course in micro-economics first before an introductory course in macro-economics."

 

Agree

8


Part 1: 'Behavioural economics provides new and useful insights into individual behaviour.' Part 2: 'It is unethical for governments to use behavioural economics to

The total benefit of current levels* of migration to Australia will outweigh the total costs to Australia's economy.

 

Agree

8


Immigration - November 2016

Poll 12

'The total benefit of current levels* of migration to Australia will outweigh the total costs to Australia's economy'.

 

Strongly agree

8


Behavioural economics - September 2016

Poll 11

Part 1: 'Behavioural economics provides new and useful insights into individual behaviour.'

Part 2: 'It is unethical for governments to use behavioural economics to "nudge" citizens.'

 

PART 1 - Disagree

8

PART 2 - Disagree

8


RBA economic growth targets - August 2016

Poll 10

"The Reserve Bank of Australia should be tasked with targeting nominal economic growth rather than inflation."

 

Disagree

7

From a theoretical point of view, targeting the path of nominal income makes a lot of sense (for the reasons outlined by prominent monetary economists like Mike Woodford, amongst others). In particular, such a target implies an important degree of "history dependence" (e.g. you can have more expansionary policy going forward to make up for past mistakes, etc). I should note at this point that a nominal income growth target (as stated in the poll question) does not have these theoretical benefits and is a more contentious suggestion. Putting the distinction between level and growth targets aside, my guess is that the magnitude of the gains from moving from a flexible inflation target like we have to a well-functioning nominal income target are likely to be fairly small. From a practical point of view, there are a host of tricky implementation issues that would have to be addressed and that would likely diminish the gains from changing the monetary policy target. For example, for a small open economy like Australia it would be untenable for monetary policy to respond to high-frequency nominal terms of trade movements (which are notoriously volatile). We would end up having to target some notion of "core nominal income" to strip out such volatility. In short, my view is that in practice such a change is unlikely to yield large gains for society. Indeed, many of the concerns with the existing inflation targeting regime (the current proximity to the effective lower bound on nominal interest rates; scepticism about the efficacy of conventional monetary policy, etc) would be of much less concern if fiscal policy was doing its job. That's where the focus should be.


The Brexit - impact on UK citizens - July 2016

Poll 9

"Assuming it is implemented, Brexit will deliver net economic benefits, on average, to UK citizens within its first 5 years."

 

Strongly disagree

9

There is no conceivable scenario under which any form of Brexit will deliver net economic benefits to UK citizens at any horizon, let alone within the next 5 years (when the pain of transition is likely to be most pronounced). Brexit negotiations may lead to harm mitigation (from the UK's point of view) but that's about the best that can be hoped for. And all of this is of course putting aside the within-UK political complexities (renewed push for Scottish independence, etc).


Spend on education or business tax cut - June 2016

Poll 8

"Australia will receive a bigger economic growth dividend in the long-run by spending on education than offering an equivalent amount of money on a tax cut to business."

 

Strongly agree

9

According to the modelling commissioned by the Commonwealth Treasury for the government's company tax changes, the predicted change in the level of real GDP is about 1.2% over a long horizon. Not only is this a very small effect given the size of the changes in company tax, it's also a "one-off" level effect and so has no long-run growth dividend at all! (as Chris Murphy's modelling for the Treasury makes very clear for anyone who cares to look). By contrast, an equivalent spend on education, by supporting human capital accumulation, has a very real prospect of increasing the growth rate of real GDP over an extended period. Even a small permanent increase in the growth rate of real GDP will dominate the level effect from changing company tax.


Bah Humbug Australia - December 2015

Poll 3

"Giving specific presents as holiday gifts is inefficient, because recipients could satisfy their preferences much better with cash."

 

Strongly disagree

8


Penalty Rates Reform - November 2015

Poll 2

"Aligning Sunday penalty rates for hospitality, entertainment and retailing industries with the current levels for Saturday, as proposed in the Productivity Commission's draft report, will lead to more employment and greater availability of services in these industries on Sundays."

 

Agree

8

I agree with the statement, but want to note that this statement only speaks to potential benefits from such a policy change and does not even mention the various costs. My agreement with the statement should not be taken to imply that I believe such a policy change is socially desirable.