Friday, June 22, 2018

productivity and anti-immigration/ anti-trade

You keep productivity up by maintaining real full employment.

Bob Allen's new "poverty machine" and its implications by Branko Milanovic

Per Martin Sandbu (paywalled) at the Financial Times, Italy has slow productivity growth. This has led to anti-immigration and xenophobic-populist parties succeeding. Sandbu points out the way to increase productivity is to maintain full employment and close the output gap, not by paying workers less. 

Germany has become more competitive by paying workers less. Krugman doesn't seem to emphasize this and doesn't seem to emphasize Sandu's story. Italy needs better fiscal policy since it can't do a devaluation. 

Better fiscal policy can be a substitute for a devaluation. 

Labour UK wants the central bank (Bank of England) to focus on productivity growth. This would entail a dialogue with fiscal policy makers since they would need to pull their weight.

Simon Wren-Lewis doesn't like this.

A new mandate for monetary policy by Simon Wren-Lewis.


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