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Monday, August 24, 2009


Bernanke, a Hero to His Own, Can't Shake Critics

WASHINGTON — Ben S. Bernanke, chairman of the Federal Reserve, no longer looks sleep-deprived

He still works seven days a week, but earlier this month he took two days off — for the first time in two years — to attend his son’s wedding. And he often gets home for dinner and even out to baseball games every few weeks.

As central bankers and economists from around the world gather on Thursday for the Fed’s annual retreat in Jackson Hole, Wyo., most are likely to welcome Mr. Bernanke as a conquering hero. In Washington and on Wall Street, it would be a surprise if President Obama did not nominate Mr. Bernanke for a second term, even though he is a Republican and was appointed by President George W. Bush.

But the White House has remained silent. And despite Mr. Bernanke’s credibility in financial circles, both he and the Fed as an institution have come under political fire from lawmakers in both parties over the handling of particular bailouts and the scope of the Fed’s power.

He has been frustrated that many in Congress do not give the Fed what he believes is enough credit for what it has accomplished. Indeed, Mr. Bernanke has met privately with hundreds of lawmakers in recent months to explain the Fed’s strategy.

Fellow economists, however, are heaping praise on Mr. Bernanke for his bold actions and steady hand in pulling the economy out of its worst crisis since the 1930s. Tossing out the Fed’s standard playbook, Mr. Bernanke orchestrated a long list of colossal rescue programs: Wall Street bailouts, shotgun weddings, emergency loan programs, vast amounts of newly printed money and the lowest interest rates in American history.

Even one of his harshest critics now praises him.

“He realized that the great recession could turn into the Great Depression 2.0, and he was very aggressive about taking the actions that needed to be taken,” said Nouriel Roubini, chairman of Roubini Global Economics, who had long criticized Fed officials for ignoring the dangers of the housing bubble.

But Mr. Bernanke is hardly breathing easy. Unemployment is still at 9.4 percent, and the central bank’s own forecasts assume that it will remain that high through the end of next year. Even if all goes according to plan, Fed officials said, Mr. Bernanke’s current popularity could sink if the recovery proves slower than many people expect.

While the White House keeps mum about Mr. Bernanke’s future, the leading Democratic candidates to replace him include Lawrence H. Summers, director of the National Economic Council; Janet L. Yellen, president of the Federal Reserve Bank of San Francisco; Alan S. Blinder, a Princeton economist and former Fed vice chairman; and Roger Ferguson, another former Fed vice chairman.

Mr. Bernanke faces two major challenges. On the economic front, the Fed has to decide when and how it will reverse all its emergency measures and raise interest rates back to normal without either stalling the economy or igniting inflation.

On the political front, Mr. Bernanke is trying to defend the Fed’s power and independence as the White House and Congress debate plans to overhaul the system of financial regulation.

Democrats like Senator Christopher J. Dodd of Connecticut, chairman of the Senate Banking Committee, contend that the Fed was too cozy with banks and Wall Street firms as the mortgage crisis was building. House Republicans, and some Democrats, complain that the Fed already has too much power.

“Why does the Fed deserve more authority when institutionally it seemed to have failed to prevent the current crisis?” asked Senator Dodd last month.

The political battle over President Obama’s plan to overhaul financial regulation has put Mr. Bernanke in an awkward position.

Fed officials support the administration’s proposals to put them in charge of systemic risk like the growth of reckless mortgage lending or the misuse of financial derivatives. But they chafe at the plan to shift the Fed’s consumer-protection functions, which protect people from deceptive and unfair lending practices, to a new agency.

Mr. Bernanke has avoided publicly criticizing the White House’s call for an independent consumer regulatory agency. While acknowledging that the Federal Reserve did nothing to stop mortgage practices during the housing bubble, Mr. Bernanke has argued that the Fed has since written tough new protections for both mortgage borrowers and credit card customers.

“We think the Fed can play a constructive role in protecting consumers,” he told the House Financial Services Committee last month.

Mr. Bernanke and other Fed officials now concede they failed to anticipate the full danger posed by the explosion of subprime mortgage lending. As recently as the spring of 2007, Mr. Bernanke still contended that the problems of the housing market were largely “contained” to subprime mortgages. When panic over mortgage-backed securities began spreading through the broader credit markets in late July 2007, Fed officials initially refused to cut interest rates.

By December 2007, Mr. Bernanke became increasingly convinced that the economy itself was in trouble but policy makers were unable to reach agreement and decided not to reduce interest rates.

At a meeting on Jan. 21, 2008, the Fed slashed the benchmark federal funds rate by 0.75 percent, to 3.5 percent, the biggest one-time reduction in decades. Nine days later, officials cut the rate again, down to 3 percent.

As the credit crisis deepened, Mr. Bernanke urged Fed officials to devise proposals that had never been tried before. They responded with a kaleidoscope of emergency loan programs to a wide array of industries.

“He has had tremendous courage throughout this episode,” said Frederic S. Mishkin, a professor at Columbia University’s business school and a former Fed governor.

Amid the chaos, Fed and Treasury officials made numerous mistakes. Their original idea for the $700 billion to buy up bad mortgage assets held by banks has yet to get off the ground.

But economists say Mr. Bernanke’s most important accomplishment was to create staggering amounts of money out of thin air.

All told, the Federal Reserve has expanded its balance sheet to $1.9 trillion today, from about $900 billion a year ago. Analysts now caution that Mr. Bernanke’s job is only half complete. He will eventually have to reel all that money back. He has already laid out elements of the Fed’s “exit strategy,” but Fed officials have been careful to say it is still too early to pull back any time soon.

source NYT



Wednesday, August 19, 2009

How should the collapse of the world financial system affect economics?

After 1929 economics changed:
Will economists wake up in 2009?

We are all Keynesians again

A remarkable feature of the unprecedented financial crisis that erupted in September 2008 is the doctrinal shift among world leaders. The market is no longer seen as the solution to every problem. The state has to step in to save capitalism. The US Republican Party had been the champion of free markets and minimal state intervention, yet President George W. Bush became the exponent of a huge state bale-out of the banks with a massive extension of state ownership within the financial system.
Alan Greenspan, former chairman of the US Federal Reserve, belatedly declared that he had ‘made a mistake in presuming that the self-interest of organizations, specifically banks’ would protect ‘shareholders and equity in the firms’. He had ‘discovered a flaw in the model’ of liberalisation and self-regulation (Guardian, 24 October 2008).
All UK Prime Ministers since Margaret Thatcher have promoted market liberalisation. Yet everything changed with the global financial crisis. Prime Minister Gordon Brown’s package of measures including partial state ownership of banks became the global model. On 19 October 2008 the Chancellor of the Exchequer Alistair Darling announced massive government spending to kick-start the British economy. He said that the economic thinking of John Maynard Keynes was coming back into vogue.
Who were the prophets of the financial mayhem of 2008? On 7 September 2006, Nouriel Roubini, an economics professor at New York University told International Monetary Fund economists that the US was facing a collapse in housing prices, sharply declining consumer confidence and a recession. Homeowners would default on mortgages, the mortgage-backed securities market would unravel and the global financial system would seize up. These developments could destroy hedge funds, investment banks and other major financial institutions. Economist Anirvan Banerji responded that Roubini’s predictions did not make use of mathematical models and dismissed his warnings as those of a habitual pessimist (New York Times, August 15, 2008).
In October 2008 the British sociologist Laurie Taylor asked listeners of his weekly BBC radio programme to find an economist who had predicted the 2008 credit crunch and financial crisis. The nominations were scrutinised carefully and most were rejected. On 15 October 2008 the radio host announced that the most prescient prophet of the outcome of international financial deregulation since 1980 was the relatively obscure British financial economist Richard S. Dale. In his book on International Banking Deregulation, Dale (1992) had argued that the entry of banks into speculation on securities has precipitated the 1929 crash, and that growing involvement of banks in securities activities resulting from incremental deregulation since 1980 might precipitate another financial collapse. Dale’s book received a mixed review in the Journal of Finance in 1993 and slipped off the citation rankings.
Hyman Minsky (1919-1996) got some credit too. In a series of papers, Minsky (1982, 1985, 1992) argued that capitalism has an inherent tendency to instability and crisis. The key destabilising mechanism is speculation upon growing debt. Minsky gave a number of warnings about the severe consequences of global financial deregulation after 1980. Although championed by Post Keynesians, Minsky’s ideas were never popular with the mainstream. Yet on 4 February 2008 the New Yorker noted that references to Minsky’s financial-instability hypothesis ‘have become commonplace on financial Web sites and in the reports of Wall Street analysts. Minsky’s hypothesis is well worth revisiting.’

But does does anyone read Keynes?

Chancellors, bloggers, newspapers and magazines may have noticed the relevance of such economists as Keynes and Minsky for today, but have they been rediscovered in departments of economics in the most prestigious universities? I eagerly await any signs of such an awakening. In the meantime we may record the neglect into which even Keynes has fallen. I tried without success to find the work of Keynes or Minsky on any reading list available on the Web of any macroeconomics or compulsory economic theory course in any of the top universities in the world. Indeed, reading lists themselves are hard to find for any of the most prestigious courses in economics. Instead, there is ample evidence of student proficiency requirements in mathematics.
Turn to the most prestigious journals in economics. By searching leading journals that have been in existence since 1950, we can ascertain how many times the aforementioned authors were cited in each decade. Table 1 shows the results. Keynes remains the most highly cited of the four authors, but his visibility in leading journals has dropped dramatically in each decade. The overall picture in leading journals of economics is one of the dramatic fall in any the discussion of Keynes’ ideas, and a relative neglect of other authors who warned of the dangers of financial deregulation.

The outsider may imagine that this is simply a matter of misjudgement or prejudice. Academic economists are simply citing the wrong people. Instead of citing Milton Friedman or Friedrich Hayek they should be referencing Keynes’ General Theory. Such a perception of what has gone wrong would be mistaken. By citation measures, Keynes’s classic antagonists do little better. Take Nobel Laureate Friedman: from 1950 he was cited by an average of only 344 articles or reviews per decade, in the same list of journals. Nobel Laureate Friedrich Hayek was cited by only 139 items per decade. Nobel Laureate Gerard Debreu, a mathematical economist and pioneer of general equilibrium theory, was cited by only 24 items per decade. Mainstream economists seem to have stopped citing anyone, except the most recent pioneers of mathematical technique.

Do economists learn?

As things stand, to get published in leading journals it is no longer necessary to read or cite any economist beyond the recent past. Instead of classic texts, most economists are interested in mathematical models. As Friedman (1999, p. 137) has complained: ‘economics has become increasingly an arcane branch of mathematics rather than dealing with real economic problems.’ A Commission of the American Economic Association on the state of graduate education in economics feared that ‘graduate programs may be turning out a generation with too many idiot savants skilled in technique but innocent of real economic issues’ (Krueger et al, 1991, pp. 1044–5). Other leading economists have expressed similar worries (Blaug 1997).
In the high temples of economics, mathematical technique now dominates real-world substance. Hence the tasks of reforming economics are very different from those that faced economists after the Great Crash of 1929. In both style and substance, economics was a very different subject then. Keynes’ argument was that the assumptions behind laisser faire economics were inappropriate for the real work economic system. By 1945, the experience of the Great Depression and subsequent recovery had convinced the majority of the profession that Keynes was right.
It was not primarily a battle of economic models or econometric techniques. But ironically, the Great Depression helped to provide an impetus for more extensive use of mathematics in economics. A younger generation of economists, impatient with the failure of the older economists to find solutions, turned to mathematical models. Reflecting on this earlier period of his life, before he turned to institutional economics and became a critic of the neoclassical mainstream, Gunnar Myrdal (1972, pp. 6-7) wrote:
Faced with this great calamity, we economists of the ‘theoretical’ school, accustomed to reason in terms of simplified macro-models, felt we were on the top of the situation ... It was at this stage that economists in the stream of the Keynesian revolution adjusted their theoretical models to the needs of the time, which gave victory much more broadly to our ‘theoretical’ approach.
Other economists reached a similar verdict (Hodgson 2004, pp. 383-6). A group of young and mathematically minded converts to Keynesianism, led by Paul Samuelson and others, developed some simple macroeconomic models. The attraction of this approach was partly its technocratic lure, and partly because it proposed apparent solutions to the urgent problem of the day. It appeared that increasing a variable called G could alleviate the problem of unemployment. The ‘solution’ was plain and beguiling and dressed up in mathematical and ‘scientific’ garb. Although Keynes himself warned of the limitations of mathematical technique in economics (Moggridge, 1992, pp. 621-3), he was championed by people who saw mathematics as the solution.
Although the Great Depression changed our discipline by establishing Keynesian macroeconomics, it also gave impetus to the process of mathematical formalization that took off in the post-war period. Although Keynes fell out of vogue from the 1970s to 2008, and the character of mainstream economics has changed in other respects in recent decades, its obsession with technique remains. The pressing question now is whether the financial crisis 2008, which is the most severe since the Great Depression, will reverse this fascination with mathematical technique over real-world substance.
We may remind ourselves of an incident eleven years before the 2008 credit crunch. In 1997 Robert C. Merton and Myron S. Scholes were awarded the Nobel Prize in Economics. Scholes had helped to devise the Black-Scholes equation, upon which a prominent hedge fund was based. However, following the 1997 financial crisis in Russia and East Asia, the highly leveraged fund lost in 1998 $4.6 billion in less than four months and failed. (http://en.wikipedia.org/wiki/Myron_Scholes, accessed 20 October 2008.) Did the myopic modellers wake up then? Alas no.

Do not adjust your model – reality is at fault?

Neither crashes, crises nor failures of prediction necessarily impel economists in the direction of realism. One likely reaction to the current downturn is that we should try harder to develop better models. Perhaps we should, but we must also learn the vital lesson that models on their own are never enough. A better understanding of our current predicament must also come from a much fuller appreciation of both economic history and the history of ideas in economics. What is required is a wholesale revitalisation of the culture within the economics profession.
The June 2000 protest of French students is as relevant as before. They objected to the use of mathematics as ‘an end in itself’ and dogmatic teaching styles that leave no place for critical and reflective thought. They petitioned in favour of engagement with empirical and concrete economic realities, and for a plurality of theoretical approaches.
To understand the current economic crisis we have to look at both economic history and the history of economic thought. To understand how economics has taken a wrong turning we have to appreciate work in the philosophy of economics and the relationship between economics and ideology. These unfashionable discourses have to be brought back into the centre of the economic curricula and rehabilitated as vital areas of enquiry.
Unless mainstream economics takes heed of these warnings and proves its relevance for the understanding of the most severe crisis of the capitalist system since the 1930s, then it will be doomed to irrelevance. My suggestion is that a world protest of academic, student and business economists be organised to drive home this point. To avoid dismissal as yet another heterodox whinge, this protest has to be led by high-ranking economists that are concerned about the direction of our subject. I would like to put this issue at the top of our agenda.

Geoffrey M. Hodgson [University of Hertfordshire, UK]

Blaug, Mark (1997) ‘Ugly Currents in Modern Economics’, Options Politiques, 18(17), September, pp. 3-8. Reprinted in Mäki, Uskali (ed.) (2002) Fact and Fiction in Economics: Models, Realism and Social Construction (Cambridge and New York: Cambridge University Press).
Dale, Richard S. (1992) International Banking Deregulation: The Great Banking Experiment (Oxford: Blackwell).
Friedman, Milton (1999) ‘Conversation with Milton Friedman’, in Brian Snowdon and Howard Vane (eds), Conversations with Leading Economists: Interpreting Modern Macroeconomists (Cheltenham: Edward Elgar), pp. 122-44.
Hodgson, Geoffrey M. (2004) The Evolution of Institutional Economics: Agency, Structure and Darwinism in American Institutionalism (London and New York: Routledge).
Krueger, Anne O. et al. (1991) ‘Report on the Commission on Graduate Education in Economics’, Journal of Economic Literature, 29(3), September, pp. 1035-53.
Minsky, Hyman P. (1982) ‘Finance and Profits: The Changing Nature of American Business Cycles’, in Hyman P. Minsky, Can ‘It’ Happen Again?: Essays in Instability and Finance. (Armonk, NY: M.E. Sharpe.)
Minsky, Hyman P. (1985) ‘The Financial Instability Hypothesis: A Restatement’, in Philip Arestis and Thanos Skouras (eds), Post Keynesian Economic Theory (Armonk, NY: M.E. Sharpe.)
Minsky, Hyman P. (1992) ‘The Financial Instability Hypothesis’, Jerome Levy Economics Institute Working Paper No. 74. Reprinted in Philip Arestis and Malcom C. Sawyer (eds), Handbook of Radical Political Economy (Aldershot: Edward Elgar).
Moggridge, Donald E. (1992) Maynard Keynes: An Economist’s Biography (London: Routledge).
Myrdal, Gunnar (1972) Against the Stream: Critical Essays in Economics (New York: Pantheon Books).

SOURCE http://www.geoffrey-hodgson.info/p1.htm


Thursday, August 13, 2009

THE GLOBALIZATION -BASICS d-proenlightenment period


" * That every inch of a country's soil be utilized for agriculture, mining or manufacturing.
* That all raw materials found in a country be used in domestic manufacture, since finished goods have a higher value than raw materials.
* That a large, working population be encouraged.
* That all export of gold and silver be prohibited and all domestic money be kept in circulation.
* That all imports of foreign goods be discouraged as much as possible.
* That where certain imports are indispensable they be obtained at first hand, in exchange for other domestic goods instead of gold and silver.
* That as much as possible, imports be confined to raw materials that can be finished [in the home country].
* That opportunities be constantly sought for selling a country's surplus manufactures to foreigners, so far as necessary, for gold and silver.
* That no importation be allowed if such goods are sufficiently and suitably supplied at home. "




Wednesday, August 05, 2009

The Global Financial Crisis -A LETTER TO THE QUEEN

Her Majesty The Queen
Buckingham Palace
10 Carlton House Terrace
London SW1Y 5AH
Telephone: +44 (0)20 7969 5200
Fax: +44 (0)20 7969 5300
22 July 2009
When Your Majesty visited the London School of Economics last November, you quite rightly asked: why had nobody noticed that the credit crunch was on its way? The British Academy convened a forum on 17 June 2009 to debate your question, with contributions from a range of experts from business, the City, its regulators, academia, and government. This letter summarises the views of the participants and the factors that they cited in our discussion, and we hope that it offers
an answer to your question.
Many people did foresee the crisis. However, the exact form that it would take and the timing of its onset and ferocity were foreseen by nobody. What matters in such circumstances is not just to predict the nature of the problem but also its timing. And there is also finding the will to act and being sure that authorities have as part of their powers the right instruments to bring to bear on the problem.
There were many warnings about imbalances in financial markets and in the global economy. For example, the Bank of International Settlements expressed repeated concerns that risks did not seem to be properly reflected in financial markets. Our own Bank of England issued many warnings about this in their bi-annual Financial Stability Reports. Risk management was considered an important part of financial markets. One of our major banks, now mainly in public ownership, reputedly had
4000 risk managers. But the difficulty was seeing the risk to the system as a whole rather than to any specific financial instrument or loan. Risk calculations were most often confined to slices of financial activity, using some of the best mathematical minds in our country and abroad. But they frequently lost sight of the bigger picture.
Many were also concerned about imbalances in the global economy. We had enjoyed a period of unprecedented global expansion which had seen many people in poor countries, particularly China and India, improving their living standards. But this prosperity had led to what is now known as the ‘global savings glut’. This led to very low returns on safer long-term investments which, in turn, led many investors to seek higher returns at the expense of greater risk. Countries like the UK and the
USA benefited from the rise of China which lowered the cost of many goods that we buy, and through ready access to capital in the financial system it was easy for UK households and businesses to borrow. This in turn fueled the increase in house prices both here and in the USA. There were many who warned of the dangers of this.
But against those who warned, most were convinced that banks knew what they were doing. They believed that the financial wizards had found new and clever ways of managing risks. Indeed, some claimed to have so dispersed them through an array of novel financial instruments that they had virtually removed them. It is difficult to recall a greater example of wishful thinking combined with hubris. There was a firm belief, too, that financial markets had changed. And politicians of all types
were charmed by the market. These views were abetted by financial and economic models that were good at predicting the short-term and small risks, but few were equipped to say what would happen when things went wrong as they have. People trusted the banks whose boards and senior executives were packed with globally recruited talent and their non-executive directors included those with
proven track records in public life. Nobody wanted to believe that their judgement could be faulty or that they were unable competently to scrutinise the risks in the organisations that they managed.
A generation of bankers and financiers deceived themselves and those who thought that they were the pace-making engineers of advanced economies.
All this exposed the difficulties of slowing the progression of such developments in the presence of a general ‘feel-good’ factor. Households benefited from low unemployment, cheap consumer goods and ready credit. Businesses benefited from lower borrowing costs. Bankers were earning bumper bonuses and expanding their business around the world. The government benefited from high tax revenues enabling them to increase public spending on schools and hospitals. This was bound to create a psychology of denial. It was a cycle fuelled, in significant measure, not by virtue but by delusion.
Among the authorities charged with managing these risks, there were difficulties too. Some say that their job should have been ‘to take away the punch bowl when the party was in full swing’. But that assumes that they had the instruments needed to do this. General pressure was for more lax Regulation – a light touch. The City of London (and the Financial Services Authority) was praised as a paragon of global financial regulation for this reason.
There was a broad consensus that it was better to deal with the aftermath of bubbles in stock markets and housing markets than to try to head them off in advance. Credence was given to this view by the experience, especially in the USA, after the turn of the millennium when a recession was more or less avoided after the ‘dot com’ bubble burst. This fuelled the view that we could bail out the economy after the event.
Inflation remained low and created no warning sign of an economy that was overheating. The Bank of England Monetary Policy Committee had helped to deliver an unprecedented period of low and stable inflation in line with its mandate. But this meant that interest rates were low by historical standards. And some said that policy was therefore not sufficiently geared towards heading off the
risks. Some countries did raise interest rates to ‘lean against the wind’. But on the whole, the prevailing view was that monetary policy was best used to prevent inflation and not to control wider imbalances in the economy.
So where was the problem? Everyone seemed to be doing their own job properly on its own merit.
And according to standard measures of success, they were often doing it well. The failure was to see how collectively this added up to a series of interconnected imbalances over which no single authority had jurisdiction. This, combined with the psychology of herding and the mantra of financial and policy gurus, lead to a dangerous recipe. Individual risks may rightly have been viewed as small, but the risk to the system as a whole was vast.

So in summary, Your Majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.
Given the forecasting failure at the heart of your enquiry, the British Academy is giving some thought to how your Crown servants in the Treasury, the Cabinet Office and the Department for Business, Innovation & Skills, as well as the Bank of England and the Financial Services Authority might develop a new, shared horizon-scanning capability so that you never need to ask your question again. The Academy will be hosting another seminar to examine the ‘never again’ question more widely. We will report the findings to Your Majesty. The events of the past year have delivered a salutary shock. Whether it will turn out to have been a beneficial one will depend on the candour with which we dissect the lessons and apply them in future.
We have the honour to remain, Madam,
Your Majesty’s most humble and obedient servants

Professor Tim Besley, FBA Professor Peter Hennessy, FBA

List of Participants
Professor Tim Besley, FBA, London School of Economics; Bank of England Monetary Policy
Professor Christopher Bliss, FBA, University of Oxford
Professor Vernon Bogdanor, FBA, University of Oxford
Sir Samuel Brittan, Financial Times
Sir Alan Budd
Dr Jenny Corbett, University of Oxford
Professor Andrew Gamble, FBA, University of Cambridge
Sir John Gieve, Harvard Kennedy School
Professor Charles Goodhart, FBA, London School of Economics
Dr David Halpern, Institute for Government
Professor José Harris, FBA, University of Oxford
Mr Rupert Harrison, Economic Adviser to the Shadow Chancellor
Professor Peter Hennessy, FBA, Queen Mary, University of London
Professor Geoffrey Hosking, FBA, University College London
Dr Thomas Huertas, Financial Services Authority
Mr William Keegan, The Observer
Mr Stephen King, HSBC
Professor Michael Lipton, FBA, University of Sussex
Rt Hon John McFall, MP, Commons Treasury Committee
Sir Nicholas Macpherson, HM Treasury
Mr Bill Martin, University of Cambridge
Mr David Miles, Bank of England Monetary Policy Committee
Sir Gus O’Donnell, Secretary of the Cabinet
Mr Jim O’Neill, Goldman Sachs
Sir James Sassoon
Rt Hon Clare Short, MP
Mr Paul Tucker, Bank of England
Dr Sushil Wadhwani, Wadhwani Asset Management LLP
Professor Ken Wallis, FBA, University of Warwick
Sir Douglas Wass
Mr James Watson, Department for Business, Innovation and Skills
Mr Martin Weale, National Institute of Economic and Social Research
Professor Shujie Yao, University of Nottingham