Britain's miracle of stability
An extraordinary - by historical standards, almost uncanny - stability has emerged in the UK economy. It has now grown in each of the past 47 quarters, by a cumulative total of 39 per cent. Of the Group of Seven leading industrial countries, no other has shown quite such stability. Why has this happened? And can it last?
A fascinating analysis by Bill Martin, until recently chief economist at UBS Global Asset Management, and Robert Rowthorn of Cambridge University demonstrates that this increase in stability is not unique to the UK *. Between 1994 and 2003, the volatility of growth and inflation was also sharply lower in the US, Germany, France, Italy and Japan.
Nevertheless, the UK's performance has been outstanding. First, the reduction in volatility has not coincided with poor economic growth, as has been the case for Germany, France, Italy and Japan. Between the second quarter of 1992 and the first quarter of this year, the UK economy expanded at a compound rate of 2.9 per cent a year. Over the same period, the French economy expanded at 1.9 per cent, the Italian and Japanese economies at 1.4 per cent and the German at a mere 1.2 per cent. Of the G7 economies, only the US and Canada have grown faster than the UK. Second, between 1994 and 2003, the UK's growth was more stable than that of the US, Germany, France, Italy and Japan. The UK's volatility of inflation was also lower than that of Germany, Japan and Italy.
Why has this huge improvement in UK performance occurred? To answer this question, we need to consider what the UK has in common with other advanced economies and what is special about it. Mr Martin and Prof Rowthorn consider three sets of explanations for the general improvement in stability: structural changes in economies, such as the shift from industry to services, superior inventory management and financial deregulation; improvements in policies and institutions; and smaller shocks.
Careful analysis suggests that most structural explanations do not work, although one should note a plausible exception: international economic integration and so greater competitive pressure upon, and within, national economies. More compelling is the change in the policy regime. The optimistic view would be that, after some 70 years of trial and error, we know at last how to make a fiat money regime - one with no external anchor, such as gold - work. The shift is towards more or less explicit inflation targeting. But the discretion inherent in such a regime is, as Mervyn King, the governor of the Bank of England, has recently explained, constrained by the delegation to the central bank of the power to set interest rates**.
Patting ourselves on the back is a pleasurable activity. But Mr Martin and Prof Rowthorn provide a caveat. Their analysis suggests that shocks have also become more subdued over the past 20 years. This in turn has made it easier to stabilise economies.
Why then has the UK done so well in combining growth with lower instability? One answer could be that the UK has made a bigger shift towards micro-economic flexibility. The other Anglosphere economies have also reformed and liberalised more than other big advanced economies.
The biggest question, however, is whether this period of stable growth can last. A part of the answer must depend on the shocks to which the world economy is exposed. Oil at more than $100 a barrel would destabilise the UK (and world) economies substantially, even if the policy response would be less incompetent than in the 1970s.
Yet there exists a more disturbing possibility - that the very reduction in instability encourages people to assume more risk. An obvious example is the UK housing market. Low and stable interest rates have encouraged soaring levels of household debt and an explosion in house prices. The optimistic view is that this increased vulnerability will make small changes in interest rates more effective. The pessimistic one is that it will also make it more difficult for the Bank to calibrate its response to shocks.
In all, the performance of the British economy has been outstanding not just by its own historical standards but also by the standards of many other advanced economies. The improvement is the result of both luck and judgment. But whether it will last is uncertain. Big shocks are possible. More worrying is the possibility that stability is its own enemy. If less instability persuades people to assume ever more risk, economies will become more unstable again. If for no other reason, it would be rash to assume that the astonishing success of the past 12 years will endure.
* Will stability last? UBS Global Asset Management, March 2004; ** The Institutions of Monetary Policy - The Ely Lecture 2004,
www.bankofengland.co.uk 英国经济稳定的奇迹
英国经济出现了一种异常的、以历史标准衡量几乎是离奇的稳定。英国经济在过去47个季度中，每季均取得了增长，累计总共增长39%。在七大国工业集团中，没有其他国家表现出如此的稳定性。为什么发生这种情况呢？这种稳定能持久吗？
瑞银全球资产管理公司(UBS Global Asset Management)的首席经济学家比尔?马丁(Bill Martin)和英国剑桥大学罗伯特?罗松(Robert Rowthorn)的分析证明，这种稳定性的增长不是英国所独有的*。1994至2003年间，在美国、德国、法国、意大利和日本，增长和通胀的波动性也已急剧下降。
然而，英国的表现非常突出。首先，波动性的降低并没有糟糕的经济表现相随，而德国、法国、意大利和日本的经济表现则很糟糕。在1992年第二季度至今年首季间，英国经济以每年2.9%的复合增长率增长。同期，法国经济以1.9%的速度增长，意大利和日本经济增长速度为1.4%，而德国仅为1.2%。七大国经济体中，只有美国和加拿大的增长快于英国。其次，1994年至2003年间，英国的增长比美国、德国、法国、意大利和日本更为稳定。英国通胀的波动率也低于德国、日本和意大利。
为什么英国的表现能出现如此巨大的改善呢？要回答这个问题，我们需要考虑，英国与其它发达经济体有何共同之处，有何特殊的地方。马丁先生和罗松教授认为，有三类原因可以解释稳定性的总体提高：经济体发生结构性改变，如从工业转向服务业、优良的存货管理，和金融管制解除；政策和机构改进；以及遭受的冲击相对较小。
仔细的分析表明，大多数结构性解释是无效的，尽管人们应该注意到一个看似有理的例外：国际经济一体化以及对各国经济体及经济体内的竞争压力增加。而更有说服力的是政策体制的改变。乐观的看法会认为，经过大约70年的反复试验，我们最终知道如何使法币体制有效运作，这种体制没有诸如黄金之类的外部驻锚。这种转变趋向于或多或少比较明确的通胀目标。然而正如英国央行行长梅尔文?金(Mervyn King)最近解释的那样，这种体制所固有的自行决定能力，受到央行获得决定利率授权的掣肘。**
赞美自己是项令人惬意的活动，但马丁先生和罗松教授则提出了一个忠告。他们的分析表明，过去20年里，历次冲击也已变得更加缓和，这反过来又使稳定经济局面的努力变得更加容易了。
那么在将经济增长和较低的不稳定性相结合方面，英国又为何做得这么出色呢？一个答案可能是英国已朝着微观经济的灵活性这一目标做出了更大的转变。英语圈的其它经济体也已进行了改革，其经济开放程度超过了其他大型先进经济体。
但最大的疑问是，这个稳定增长的时期能否持续呢？答案的一部分必须取决于世界经济所面临的各种冲击。如果石油价格超过每桶100美元，则将极大地破坏英国（和世界）经济的稳定，即使政策反应比上世纪70年代更加有效也将是如此。
然而，还存在一个更加令人不安的可能：不稳定性的降低本身会鼓励人们承担更多风险。一个明显的例子就是英国的住房市场。较低且稳定的利率已导致家庭债务飚升，住房价格则出现了爆炸性增长。乐观的观点认为，这种脆弱性的上升将使利率的小幅调整更加有效。悲观的观点则认为，这也将使央行更难于调整其对冲击做出的反应。
总的来说，英国经济的表现一直比较突出，不仅从其自身的历史标准来衡量是如此，以许多其他先进经济体的标准来衡量也是如此。业绩的改善是运气和判断力共同作用的结果。但这种业绩能否继续下去还不确定。有可能出现大的冲击。更令人担忧的是，稳定可能会成为自己的敌人。如果稍高的稳定性能说服人们承担更多的风险，各经济体将再次变得更不稳定。如果不是出于其他任何原因，那么就此假设过去12年取得的惊人成功将得以持续，未免太轻率了。
*《稳定将会持续吗？》(Will stability last?)，瑞士银行全球资产管理公司，2004年3月；
