Michael Nevin

Author's posts

Chronicle of a death foretold. Five prophecies fulfilled and one yet to come to pass.

“The only relevant test of the validity of an hypothesis is comparison of its prediction with experience.” [Milton Friedman “The Methodology of Positive Economics” (1953)]. Five predictions of The Golden Guinea: Prediction 1: The Euro will inflict great economic damage on the nations that adopt it. “The case put by supporters of the Euro for …

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Kondratieff, Schumpeter and the Outlook for 2015

Thirty years ago, my book The Age of illusions (1983) contained an exposition of the long waves in economic life, first identified by the Russian economist Nikolai Kondratieff during the 1920s. Kondratieff’s thesis was that long waves lasting approximately half a century each occur in the economic activity of capitalist economies. These waves have two …

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Monetary policy in an independent Scotland – currency union and beyond

There is now just over a month to go before the Scottish independence referendum on September 18th 2014. My purpose in this analysis is not to express a political opinion on the desirability or otherwise Scottish independence. It is rather to give a view as a professional economist on Scotland’s optimal monetary policy, if it …

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The morning after the night before: six steps to Scottish economic independence

For success in politics or business, leaders need a coherent and effective “Plan A” to submit to the public and their key stakeholders. But they also need a viable “Plan B” – a contingency plan that can be rolled out in the event that Plan A cannot be delivered for reasons beyond their control. The …

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Mr Salmond and the £

As the date of the Scottish independence referendum approaches, a key issue is the question of Scotland’s currency if it were to become an independent nation. The policy advocated by the Scottish National Party is to maintain a currency union with England, a proposal that is causing increasing concern among many economists, myself included. I …

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Have central banks given up on fixing global finance?

In an article in the Financial Times on August 28, “Central Banks have given up on fixing global finance”, Robin Harding concludes that, “a reliable backstop (to the international monetary system) is impossible when the international system relies on a national currency – the US dollar – as its reserve asset…. The answer is what …

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The Outlook for the Bond Market

In my comment on April 3rd, “Are Sterling Bond Prices in a Bubble?”, I concluded that, “Quantitative easing has led to an artificial bond bubble. Investors should be very cautious in committing new funds to UK fixed-income securities. Their risk / return profile is distinctly unappealing – none moreso than gilts issued by the UK …

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Sir Mervyn King as Governor of the Bank of England – Marks out of 10

As Sir Mervyn King enters his final days as Governor of the Bank of England, the time is right to assess his overall record over the past 10 years. 1. Monetary policy before the credit crunch. The initial phase of his tenure, between 2003 and 2007, appeared at the time to be a period of …

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The Reinhart-Rogoff Controversy and predictors of sovereign debt default

There has been much debate in the financial press recently about the implications of new evidence that seems to contradict the Reinhart-Rogoff rule. The strong version of the rule states that, once the ratio of national debt to GDP rises above 90%, it has a significant negative impact on the rate of economic growth. The …

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Are Sterling Bond Prices in a Bubble?

The news that Coutts, the private bank for high net worth clients, has just warned its clients against investing in high yield bonds brought to mind the analysis of a paper published many years ago in an Italian academic journal (“Dilemmas in Development Banking”, Savings and Development, Milan, 1985). Coutts is warning its clients against …

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