Suchergebnisse

Koo, Paya and Peel make some very worthwhile points regarding the operation of the SMPC. Their analysis is interesting and helpful. However, the particular structure of the SMPC and the way it operates is, to some extent, determined by practicalities but also, more importantly, by the fact that it tries to operate as a discussion forum bringing together academics, bankers and financial experts rather than simply providing opinions on what the MPC should do.

It has been argued that quantitative easing (QE) is designed to prevent a collapse of broad money. However, the official M4 broad‐money measure was growing rapidly when QE was introduced. This figure was, though, exaggerated by artificial transactions within banking groups and some have suggested that broad money supply measures should exclude these transactions (M4X). This article tests whether the authorities are right to focus on M4X. It is concluded that M4X is more closely related to the wider economy than M4 but that the official M4X statistics need substantial improvement. The conclusions regarding QE generally are more nuanced and it is noted that the UK's fiscal profligacy is exacerbating the downturn in the private sector, despite politicians' claims to the contrary.

The 2009 Budget projections imply that the ratio of general government expenditure to national income will rise to 53.4% in 2010, the highest ratio since World War II and 6.9% above the peak recorded in World War I. Public sector net borrowing is projected to increase from 8% of national income in 2008–09, to 14.1% in 2009–10, and 13.5% in 2011–12. There must be serious doubt whether deficits on this scale can be financed in a non‐inflationary manner, without very large capital inflows from abroad. It is hard to see why such inflows should be forthcoming now that the British economy has become so highly taxed by international standards.

Last autumn's run on Northern Rock was arguably of more political than economic importance. However, it is significant that most of the deposits were lost from internet and postal accounts rather than withdrawn by the picturesque queues of small investors, which attracted so much media attention, making it possibly the first cyber run on a bank. More can be learnt from failures than successes, and it now seems appropriate to consider the longer‐term implications of the Northern Rock affair for the supervisory responsibilities of the Bank of England.

The concept of the nation's 'tax‐freedom day' is a brilliantly simple expository device and always attracts media attention when it is announced. However, the calculation of tax‐freedom day is more difficult than it appears at first sight, because of the problems involved in defining, let alone measuring, both a nation's taxes and its income. Equally plausible measures of tax‐freedom day can differ by several weeks. However, the underlying concept remains one of the most vivid ways available of bringing home to ordinary citizens the costs of today's welfare state.