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NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
NICVA 16 Sept 2011
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NICVA 16 Sept 2011

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Kate Barker's presentation from NICVA's Centre for Economic Empowerment masterclass on government's economic levers

Kate Barker's presentation from NICVA's Centre for Economic Empowerment masterclass on government's economic levers

Published in: Business, Economy & Finance
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  • 1. Understanding Government's Economic Levers<br />Kate Barker<br />NICVA CEE<br />September 16 2011<br />
  • 2. Topics<br />Macro policy tools: fiscal<br /> monetary<br />Micro policy tools: labour market<br /> competition<br /> tax structure<br /> skills<br /> infrastructure<br />Which administrative level deploys?<br />
  • 3. Limits of economic knowledge<br />“But today we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. <br /> The result is that our possibilities of wealth may run to waste for a time – perhaps for a long time.”<br />(Keynes, 1930)<br />
  • 4. Post WWII macro policy approaches<br />1950s/60s: fiscal activism<br />1970s: oil crises/monetarism<br />1980s: fiscal austerity/Washington <br /> consensus<br />1990s: inflation targeting/micro reform<br />2000s: financial liberalisation/globalisation<br />2010s: age of austerity/financial repression<br />
  • 5. Today’s consensus<br /><ul><li>Macro economic policy used to limit cycles</li></ul>Best tool for this is monetary policy<br />Fiscal policy usually follows prudent rules – may be needed in a crisis (disputed?)<br />Government share of economy limited?<br /><ul><li>Micro policy used to improve growth rates
  • 6. But there is a link between cycles and growth</li></li></ul><li>Who should do what? <br />Principles:<br />Optimal currency areas<br />Spillovers (single market/fiscal strains)<br />Subsidiarity<br />Democratic legitimacy<br />
  • 7. Brussels, Westminster, Belfast<br />Fiscal policy : Westminster Brussels<br />Monetary policy:Westminster<br />Taxation: Westminster Brussels (some VAT, investment-distorting taxation)<br />Competition policy: Brussels (market power/state aid) Westminster (domestic market/consumer detriment)<br />
  • 8. Brussels, Westminster, Belfast<br />Labour market: Brussels (social contract, WTD) Westminster (most employment legislation, minimum wage, NICs) Belfast (training credits?) <br />Skills:Belfast (schools, universities)<br />Transport/infrastructure/planning: Belfast<br />Regional policy: Brussels (Selective Financial Assistance) Belfast (Invest NI)<br />
  • 9. Has policy worked?<br />GDP per capita – annual growth rate<br />Source: International Monetary Fund (IMF)<br />
  • 10. Unemployment – a success story? <br />Pct<br />Source: Office for National Statistics<br />
  • 11. CPI inflation – a less happy story?<br />Percent<br />Switch to CPI target <br /> MPC formed<br />Source: ONS<br />
  • 12. Globalisation speeds up<br />Exports and Imports as % of GDP<br />Source: IMF<br />
  • 13. Regional convergence?<br />Gross value-added per head: UK average =100<br />Source: Office of National Statistics <br />
  • 14. What don’t we understand? <br />Effects of globalisation<br />Impacts of fiscal policy<br />What really matters for growth<br />How financial markets behave<br />Future of technology<br />Environmental costs/benefits<br />How people behave<br />
  • 15. What do we want? <br />ONS well-being study:<br /><ul><li>Relationships, health, work, environment, fairness</li></ul>Does GDP still matter?<br />Northern Ireland – closing gap with neighbours: but doing it BETTER<br />

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