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Chris Giles

Chris Giles

Chris Giles is the Economics Editor of the Financial Times. Before that he was a leader writer. He reports on international and UK economics and writes a fortnightly column on the UK economy.

Articles by Chris Giles

Carney’s (old) new normal

June 27, 2014

There are many uses of the phrase “new normal” in economics these days. Usually, it is used to signify lower growth or a different type of growth than in the pre-crisis period. Mark Carney went onto the radio this morning to talk about the “new normal” in monetary policy.
Interest rates would be materially lower in future than the 5 per cent rate widely seen as normal before the crisis. The Bank of England governor’s words have been widely reported as a big new statement of policy.
Is this a new policy?
No. Carney first talked about future interest rates being “well below historical norms” in his January speech at the World Economic Forum in Davos, which confirmed the BoE had ditched its original forward guidance linking interest rates solely to unemployment. The important passage was reported clearly in the FT at the time and is copied below.

In February this year, David Miles, an external MPC member, devoted a whole speech to “the transition to a new normal for monetary policy”, in which he said that higher margins on mortgage lending, among other things, meant “the equilibrium policy rate [will be] as much as 2 per cent, and conceivably a little more, below what we used to think of as normal”.
Did Carney make a commitment on the radio?
No.

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Capital in the 21st Century – a response

May 30, 2014

Professor Thomas Piketty has given a more detailed response to the Financial Times articles and blogs on his wealth inequality data in Capital in the 21st Century (here, here, here and here). He says it is “simply wrong” to suggest he made errors in his data.
There are a few things on which we agree. First, the source data on wealth inequality is poor. I have written that it is “sketchy” and Prof Piketty says it is “much less systematic than we have for income inequality”. Second, it would have been preferable for Prof Piketty to have used a more sophisticated averaging technique than a simple average of Britain, France and Sweden to derive an estimate for European wealth inequality. Third, the available data suggests a broad trend of reduction in wealth inequality during most of the 20th Century.
There are more aspects on which there remains disagreement.

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