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Tony Yates

Tony Yates

Economist. Consulting, lecturing, a book. Ex Prof at Bham, Ex BoE staffer. Macro, policy, monetary econ, occasional nonsense.

Articles by Tony Yates

Team transitory vs team permanent

October 15, 2021

Inflation has risen in the US, the UK, the Euro Area and elsewhere, as demand has increased following the opening up of the economy after pandemic-induced lockdowns, and supply chains have been disrupted.

This has produced a debate amongst the economic commentariat about whether they are on ‘team transitory’ [the rise in inflation will be temporary] or ‘team permanent’ [you get the idea]. Participants have been updating their guesses about which team will win, as each inflation print is released.

The debate does not really make much sense. It is very difficult to justify being on ‘team permanent’. There are not many circumstances whereby the rise in inflation could become permanent and they they require extreme and counterfactual views to take them seriously.


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Should Mervyn recuse himself from the House of Lords Economic Affairs Committee enquiry on QE?

February 1, 2021

I just noticed that Mervyn King, former Bank of England Governor, has taken a place on the HoL Economic Affairs Committee, and is therefore due to take part hearing evidence in an enquiry on quantitative easing [QE].

This is a curious state of affairs.

Lord King was head of the Bank when QE was instigated in March 2009, and piloted the program, which involved not just monetary policy decisions by the MPC, but also important execution decisions in the markets area, with the set up of reverse auctions, and decisions about what assets to purchase.

An enquiry into QE is bound to either explicitly touch on, or have looming in the background, certain questions that involve issues about King’s own views and actions. For example: should QE have been embarked on at all? Did

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New piece in Prospect on vaccine nationalism

January 31, 2021

You can find it here. Anyone teaching international trade, game theory, time consistency, should find this period full of great – if tragic – teaching material.

I just read this great thread by one of the researchers involved in the Oxford/AZ vaccine too, so read this.

It is extraordinary how covid19 has affected not only all our lives, but all our social and economic policy debates.

Although it would be relentless and depressing, you could teach an entire economics degree using covid19 as a case study.

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Has the window closed for a Centre for Econ and Epi?

January 31, 2021

A while back I argued that the government should set up an independent body charged immediately with producing integrated economic and epidemiological forecasts, analysis and virus/fiscal policy options.

With the vaccine roll out proceeding at >400k shots per day, and the end of lockdown measures in sight, has the time for a body like this come and gone?

I don’t think so.

For a start, if we had such a body now we could be debating openly and transparently how to allocate vaccines; and how to time the relaxation of social distancing measures. This would make policy more easily scrutinized, and begin to reduce the uncertainty about what the immediate post covid19 future looks like.

There is also the point that to a greater or lesser extent there may not be a post

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How a Brexit transition end and covid19 compound

October 2, 2020

Talking to a friend today he pointed out how the pandemic, and a potential disorderly Brexit, compound each other.

The way for consumers and firms to get through a threatened interregnum in essential supplies, to ensure continuity of services and, in the case of the consumer, of life itself! is to stockpile. An unusually large surplus of spare parts, inputs, or just food, can tide you over in case the sudden imposition of trade frictions, or panic about them, causes supplies to dry up.

However, stockpiling costs money. The opportunity cost is the cost of finance. Although risk free rates are low, the rates already stretched people and firms might cofront are very high, if marginal finance was available at all.

So covid19 will make it much harder for them to insure

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Terms of reference for a new Centre for Economics and Epidemiology

July 14, 2020

In a previous post [scroll down!], I called for the UK [and other countries] to set up new, local centres for Economics and Epidemiology.  This is because the economic-epidemiological outlooks are impoverished by the two disciplines – at least at the point of making contact with policy and actual forecasts – are cleaved in two.  Epidemiological forecasts have too little economics;  macroeconomic forecasts have no epidemiology.  The result is public health and economic policymaking that is not on a sure foundation.
The problem can be remedied relatively cheaply.  Perhaps £5-10m per 5 year period.  In replies to my tweets about the idea, many suggested this thing start as an outgrowth of existing institutions, like the IFS, or NIESR.  I think this is a bad idea.  The task is important

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We need a new UK Centre for Epidemiology and Economics

July 10, 2020

The UK covid19 crisis kicked off with forecasts of the epidemic with and without mitigation measures like lockdowns.  They were ultimately alarming enough to persuade the government to lockdown.
The forecasts joined epidemiological insights with social science – evidence on the propensity of different groups to contact each other.  But they did not tread further into economics.  Economists like Toxvaerd and Fenichel, and subsequently many others who joined in after covid19 emerged  [including Moll, Werning, Acemoglu, Eichenbaum, Trabandt, Rebelo and more] showed how to take this extra step.
In a variety of relatively simple models these authors study how behaviour responds to the progression of the epidemic;  how the risk of infection affects incentives to work and consume.  The

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Vouchers: with poor timing, perhaps the worst kind of counter-covid recession policy

July 9, 2020

I am crystallizing my concern about retail vouchers, part of Rishi Sunak’s latest package [and recommended by others, including one of my affilliations/clients, Resolution Foundation], and mostly thanks to a Jason Furman tweet.
Sunak has seen his challenge as wanting to target stimulus and support policies at the sectors hardest hit by the covid19 crisis.  This motive is understandable.  Despite what the MMT headcases will tell you, fiscal support involves the government using scarce current and future tax raising powers.
So you want to maximise the bang for your buck.  Why give money, in this case, to sectors or people that were not particularly hard hit, and therefore don’t need it?
A related issue of waste-avoidance is giving money to people who are not short of money, and

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Make the BoE work for their oak panelled offices and get them to identify the missing stimulus needed

July 7, 2020

The Bank of England is, arguably, at the end of the road as far as currently agreed methods of monetary stimulus are concerned.
Interest rates are at their effective floor – in the UK, as understood by the Monetary Policy Committee – 0.1 per cent.  QE purchases of assets stand at £745bn.   This is unlikely to have done much harm [although some contest this] but equally, has probably not, at least as far as its later increments are concerned, imparted much stimulus either.  At root QE policy is about swapping one zero interest, default-risk-free asset for another [reserves for gilts].
It would be reasonable to ask what the Bank’s senior officials are doing, then, in the oak panelled offices that they periodically visit, or on those zoom meetings that we presume happen.  OK, so there

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Why did we release lockdown too early? Perhaps because we started too late.

July 7, 2020

It has been much commented on that the UK entered its lockdown to combat covid19 too late.  This had the consequence of allowing the virus to gain more of a foothold, generating an increasing flow of infections that quickly swamped our test and trace capacity at that point.
That in turn had the effect of meaning that the lockdown we did introduce needed to be in place for longer than otherwise.  The lockdown has the effect of reducing the reproductive rate of the virus, by reducing the number of contacts we have and the infections produced from them.  If the number of cases that our test and trace capacity can deal with is X, and we start from a number greater than that, Y, a reproductive rate of the virus that is less than 1 can convert Y into X over a certain time period, as

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Lockdowns and lockdown releases are not going to be ‘fair’

July 3, 2020

A common passtime during the lockdown, or during phases of its release was to point out some activity that has been permitted and compare it to another one that has not.  How ridiculous, we all laughed, demonically!  What incompetence the whole thing demonstrated!
There are many ways in which the government’s handling of the crisis has been catastrophically bad, but there being apparent instancies of unfairness and inconsistency in the lockdown is not one of them.
Lockdown law is not like normal law.  The point is to figure out what amount of activity the country can cope with in the sense of the test-trace-isolate capacity being there to counter the effects of the contacts and infections that whatever activity it is – going to pubs, playing cricket – generates.
It could be that as

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Periscope q and a’s for non economists Friday 10am

April 14, 2020

In case you don’t encounter my Twitter feed, I’ve experimentally started doing Periscope broadcasts of me answering questions.  Friday 10am.  Last Friday’s can be viewed here.  The sessions are targeted at non economists into economics;  econ students;  schoolkids doing econ;  schoolteachers teaching econ or related topics.
The production technology is hopelessly shonky, as you might expect.  And you will no doubt grasp why I am not a telly broadcaster when you see one of them.  The broadcasts are live and can be picked up from my Twitter feed @t0nyyates or directly from Periscope’s site.
Tweet questions at #tonyyateseconq so I can collect them.   If more questions arrive, I’ll keep doing them.  Feedback welcome.  Talking into camera feels even more like pouring material into the

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Fiscal rules have been rightly blown out of the water by the covid19 crisis

April 13, 2020

This was a piece I wrote for the New Statesman.  I had to write it a few times.  It started life as a thing about the first post GE19 budget and how they were going to finesse the issue of sticking to rules in the manifesto, vs satisfying the new ‘Blue Wall’ of Tory seats in the North.  Then the pandemic rightly blew all of those discusssions out of the water.   At some point, when we have got to the point of beginning the end of the lockdown, and can estimate the likely impact of the support measures that were in place during it, the discussion about fiscal rules will start again.   Some paydown bargain will have to be struck between ourselves and future cohorts, many of whom are not around the table to express their opinions, weighing up our rights to spread the burden out into

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New Statesman post on Mark Carney’s tenure

April 13, 2020

I laboured over this piece.  It was hard to cover all the ground, much of it technical, in a way that would interest anyone.  And I had to write it over and over to purge it of the sourness that can seep in from an ex central banker with no role other than to peer in and throw stones.  I probably did not get all the way to doing that.  Anyway, no-one cares any more about it, as the pandemic has swept such small details as ‘how should you communicate monetary policy’ and ‘what precisely are the subject bounds within which central bankers should confine their public oratory’ away as we focus on how to prevent the modern mixed economy and monetary system from collapsing entirely.  However, if you want to try to transport yourself away from the pandemic and back into that old mindset,

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‘Money printing’ is not yet a subordination of monetary policy, so keep your hair on

April 13, 2020

I wrote a thread a few days ago reacting to some of the Twitter commentary [and also to Martin Wolf’s FT piece which I don’t think struck the right tone], and this short post for The Independent covers the ground.   This should also be a counterpoint to Paul Mason’s recent New Statesman piece.  And it’s also worth reflecting back on the debates that were had as Corbyn was campaigning for the Labour leadership in 2015 and floating the idea of ‘People’s QE’.

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Nudging and banning

March 14, 2020

Here’s a Guardian piece I wrote about Government policy regarding the Coronavirus as it stood on Thursday. 
Less than 48 hours later, policy seems to have changed.  Initially eschewing enforced social distancing measures in the form of banning large sporting and other events, this is now going to happen.
On Thursday, the position on this was that 1) the science did not support a ban because this would not much to affect the spread [controversial] and 2) that there was nonetheless concern about such events placing unwanted burdens on emergency services at a time when they might later, but are not yet currently, under stress.
The science clearly has not changed in 48 hours.  And the case load has not risen to the point where the emergency services cannot cope with some people being

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New Statesman Post on that Cummings Job Ad

March 3, 2020

I didn’t post this here before, so if you didn’t see it at the time, and felt somehow that you had not had enough Cummings journalism, here is a New Statesman post about his infamous job advert.  The one that culminated in him hiring Andrew Sabisky, the ‘Superforecaster’ who subsequently resigned after views that he had expressed on eugenics and women had been unearthed from his past writings.

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Guardian article on Cornonavirus

March 3, 2020

A fair portion of those who read the blog don’t follow Twitter, so posting this Guardian piece by me here in case you have not seen it.  The headline of the article doesn’t really match the content.  My main point is about the many networks – travelling, supply chain, finance and social media – in the globalized world that are infecting us all with the virus and its economic harm.
Central banks do have a role to play;  maximizing monetary stimulus with rate cuts and QE;  perhaps restarting funding for lending;  contemplating private asset purchases in the restarted QE program.  But because they are still dealing with the legacy of the financial crisis, the main burden will fall on the fiscal authorities.  That is, unless drastic measures like helicopter money are contemplated.

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EU trade talks chart crime

February 20, 2020

Consternation today on the internet about a chart crime committed by the EU Commission.
The EU is peturbed that the UK appears ready to renege on a commitment to negotiate a ‘level playing field’ [for example to restrict state aid] as part of a Free Trade Agreement.  To explain why it continues to want this [and hasn’t, as No 10 disingenuously suggested in a tweet using almost Russian Embassy style tactics, ‘moved the goalposts’] it dug out a slide showing data on countries with which it has reached trade deals.
Here is an image of the slide and an enumeration of other crimes by Stefan Loesch, who writes under the handle OscarDTorson.
The chart crime people are focusing on is the the fact that the size of the trade contributions to total EU trade is matched to the diameter of the

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The Get Brexit Done lot want cheerful soldiers not Philosopher King technocrats

February 15, 2020

Much has been made of the appalling spectacle of the cabinet participating in a Q and A chant with Boris Johnson.  The video circulating can be taken to be a homage to those of the Trump cabinet, featuring supplicants offering praise.
Conventionally, UK cabinet members are supposed to be the equals to the PM’s  ‘first among equals’.  Heavyweight minds negotiating policy solutions and probing their costs and benefits ceaselessly.
But the video is not meant to be a mini-documentary shedding light on the workings of government.  This video is a marketing tool.  What is being marketed is the idea of a Prime Minister with cheerful junior soldiers promising to Get Stuff Done.  Those who were seduced by ‘Get Brexit Done’ are calculated to have voted for ‘Boris’ and not be particularly

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Power? No thanks, I’m a decently paid and fulfilled megaphone

February 8, 2020

If you were designing a marketplace for ideas for policies to solve social problems, one thing you might hope is that it would incentivize people actually to take power and do things.  Only by doing things in government do problems get solved and lives altered.
If you are of a particular persuasion, the failure of the Labour Party to orient itself to obtaining power is remarkable.  A demonstration that the marketplace rules are not providing the right incentives.
But perhaps there is no puzzle.  Life as a campaigner and not a doer is not so bad.  At the top of the pile, you can expect a pretty decent salary.  MP’s earn £79k.  More than some Professors [less than others].  About 4/5 of that of a Head of Division in the Bank of England.  Compares well with local government, heads of

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A failing marketplace for ideas and policies: parties, party governance and FPTP

February 7, 2020

The UK system for marketing ideas for policy has failed us.  My own ‘centrist Dad’ brand of economics and politics no doubt colours this view.  But I think even if you do not subscribe to that kind of politics it’s possible to discern failures in the process.  A lot of this was prompted by a conversatoin with an old friend who, given his job, I can’t credit here.
Both major parties departed in pretty serious ways from recognisably sound economics, and, in the case of the Tories, frequently veered far from fairly basic norms of honesty and rationality.
On Labour’s side, the economics offences were twofold:  one faction supporting Brexit in favour of it freeing the UK economy to undertake thorough socialist intervention and/or reconnecting with an imagined and euphamistically named

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No blogging. Too much Twitter.

February 6, 2020

Apologies for the lack of posting on this blog.  Or perhaps you are relieved.  Most of my blog like thoughts seem to have migrated onto Twitter.
This may or not be a good thing.  I don’t think I am alone, as several authors have Tweeted or written columns on proper websites about the decline of the blog.
Is this the honing of thoughts into ever neater kernels, forced by the benevolent market place of ideas?   Or the slow corrosion of attention spans and mental health as Brexit and Trump consume each layer of the house of cards of our institutions and democracy?
If you don’t follow me already, try it at @t0nyyates.  I think there is even a widget somewhere on this page, lower down on the RHS, that you can click.
But I will try to get back to the blogging again soon.

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Monetary policy delegation rebounded, and an odd trade-off

August 23, 2019

Back in the day, monetary policy economists and practitioners discussed the benefits of delgating monetary policy to an independent central bank.
There were two kinds.
The first was to remove an ‘average inflation bias’.  Think of a two period game.  In period 1, the government says to an all encompassing trade union ‘we are going to give you 2 per cent inflation’.  Unions bargain for 4 per cent nominal wage increases to cover productivity and expected inflation.  Once those contracts are locked in, the government surprises the economy with 4% inflation, compressing real wages by 2% and boosting employment, which it thought would help with the next election.  However, knowing the government’s trustworthiness, or lack of it, in advance, the union would bargain for 4% plus

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Dismantling and devolving the pernicious union

August 12, 2019

In recent blog posts, I have been advancing ideas that respond to the frightending dysfunction in the UK polity.
1.  Separation of Northern Ireland, Scotland, and Wales into individual, independent countries embedded into the EU, and England levered to tether itself as a non member in name only, or rejoining at some point.
2.  Membership of the euro and aspects of the ‘ever closer political union’ that the UK has thus far been exempted from.
Using the same logic, regional devolution would help achieve and accentuate the same ends.
I am not a fan of regional devolution.  Devolving tax raising and spending powers impairs risk sharing and risks municipal corruption and cronyism.  I am not convinced that regions are better placed to trade-off whatever special insight they have into

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Brexit: the mutually inconsistent views of the desirable anchor and the stormy constitutional sea

August 12, 2019

One feature of Brexit from the perspective of those who see political and economic benefits to remaining a member of the EU is that there is no safe, perpetual compromise position.
There are soft versions of Brexit in which almost all the economic benefits of membership are reaped [for example by remaining in the single market and customs union].  But once we leave it becomes much easier to take further steps away from the EU, and the UK’s economic trading relations, regulatory environment and even to an extent political rights become unethered and more subject to the ebbs and flows of domestic politics.
For Remainers, EU membership is an economic and constitutional anchor;  anything short of this is casting off.
Some Leavers saw things exactly the other way round, of course.

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Asymmetric radicalization of Leavers and [most other] Remainers

August 11, 2019

A striking feature of the post Referendum period is the radicalization of Leavers.   Amongst leading protagonists, many supported remaining in the EU’s single market during the campaign.  Subsequently, the focus shifted towards leaving the single market and customs union in order to fulfil a revised definition of true Brexit by enabling an independent trade policy.  Now, control of the Governing party rests with a faction that openly embraces leaving the European Union without a deal, outriders deployed to dissemble about constructs like ‘managed no deal’, or ‘WTO deal’.
The radicalization has not just been on the part of the Leaver oligarchy.  Polling suggests that about 40% would choose no deal over Remaining in the EU.
There has been no parallel radicalization on the Remain

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The changing calculus of Scottish Independence

August 10, 2019

Much was made of the first poll in favour of Scottish independence.  The calculus is changing.  I would argue that for a variety of reasons, independence is now more attractive.
Relative to 2014, the first benefit is removing Scotland from the influence of two polar opposite, but pernicious political offerings, from Labour and the Tories.  During the 2014 referendum, major parties in the UK all pretty much lived within the rules of acceptable discourse, and were led by groups with different, but relatively pragamatic visions for ther UK.
This is no longer the case.  Both major parties are infested with varieties of racism;  Labour, antisemitism, and the Tories, Islamophobia.  Both parties are led by cabals of ideologues.  The Labour leadership is held by a faction of anti Western

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Lewis Goodall’s ‘Remainers are rubbish’ conclusion.

August 7, 2019

Lewis Goodall, Political Correspondent for Sky, wrote a thread on Twitter today concluding with a familiar line that Remainers are not good at politics.  They ‘may as well pack up and go home’.  They are ’embarrassingly bad at politics’.   The mental connection made is with the commentary that first began in the aftermath of the Referendum victory for Leave by recalling the spectacle of a babble of liberal economists talking conditional forecasts on the one hand, and Leave posters with ‘take back control’ and ‘let’s fund our NHS instead’ on the other.
But this is not a good characterisation of recent events.  Such as it is, the ‘Remain alliance’ is a creature of its largest member, the Parliamentary Labour Party.   That organ is in turn a creature of its leadership structure.  That

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