Public Policy Professor Advises European Economies

Posted: November 1, 2010 at 1:01 am, Last Updated: November 1, 2010 at 8:07 am

By Jocelyn Rappaport

Andrew Hughes Hallett. Creative Services photo

Mason School of Public Policy (SPP) professors influence international policy, a fact that is readily seen in Andrew Hughes Hallett’s work in Europe.

Hughes Hallett, professor of economics and public policy, sits on the Council of Economic Advisers to the government of Scotland. This small advisory body was established in 2007 as part of the process of re-creating a parliament and regional government in Scotland for the first time since 1707.

The council has responsibility for advising the first minister and his cabinet on the direction of the economy, its prospects and how to improve economic performance given the policy instruments available under the devolution settlement with the United Kingdom.

Hughes Hallett has taken the lead on setting priorities for growth, designing policy initiatives to increase productivity and competitiveness and assessing the potential of the life sciences sector for expansion. He now advises the first minister on how to design a new and separate fiscal system (taxation, spending and borrowing).

“There is a window of opportunity here given the unsettled state of British politics, and if changes are made, it will be the first major constitutional change for the UK in over a century,” says Hughes Hallett, who is also co-director of the Center for Emerging Market Policies at SPP.

With the recommendations of the United Kingdom’s Calman Commission, to which Hughes Hallett was also an advisor, the first steps have already appeared. The commission argued that a limited degree of tax autonomy should now be introduced. Both leading political parties have agreed. The outstanding question is how much autonomy Scotland should have – that is, what taxes may be devolved and what borrowing powers. Here the opinions between London and Edinburgh differ, although the UK Treasury has now accepted that the UK Government’s proposals are unworkable.

The Council of Economic Advisers to the government of Scotland at its first meeting. Hughes Hallett is at far right. Photo from the Wikipedia Commons

Hughes Hallett, who joined Mason in 2006, also has been working on the design and implementation of fiscal surveillance (budget oversight and restraint) mechanisms for governments of countries in a currency union, such as the Eurozone or the UK monetary union.

He states that although this looks like closing the barn door after the horse has bolted in some European economies, fiscal surveillance will remain a major problem for all of them in the future.

Some of his work is with the European Central Bank’s fiscal affairs department and involves using cash data on a government’s fiscal position (as opposed to the accruals data usually used, according to Hughes Hallett) to forecast slippage from the current plan, and using the information from the data to design early intervention measures of various types to minimize the cost of making corrections.

This project builds on his earlier work for the European Commission, the executive body of the European Union (EU), that focused on the case for and advantages of debt targeting rules as a monitoring device to aid fiscal discipline. That advice, delivered in 2007, now looks as if it may lead to changes in the Eurozone’s governance structure with reports from the EU president’s office and from the European Commission arguing for the adoption of debt targets and fines for those who deviate from them.

The Central Bank of the Netherlands (the Dutch Fed) retained Hughes Hallett in 2009 to conduct a review of the effectiveness of its research and how that research is used to guide policy decisions and recommendations.

This review, which occurs every seven years, contributes not only to how the research programs are constructed and run, hiring and publication strategies, but also to how the flow of information to or from the policy departments and up to the executive board are managed and how policy is determined.

In addition to these three specific examples of Hughes Hallett’s policy work involving government in the past few years, he advised the Dutch finance minister/deputy prime minister on the achievements gained from introducing the Euro and the next steps that should be taken.

In earlier work, he had advised the European Commission on the advantages of a debt-targeting system to underpin fiscal and monetary credibility, and the United Kingdom government on aspects of the Euro system as part of its review on whether to join.

Hughes Hallett also had a contract to help the European Commission on the conversion rates of the old currencies into the Euro, and he has worked with the International Monetary Fund on the design of fiscal policy rules and structural reform questions.

Not only does Hughes Hallett research and advise, he also helps explain economic concepts and policies within a historical framework. He publishes several scientific papers each year and his academic research is cited worldwide.

Hughes Hallett is a graduate of the University of Warwick (UK) and London School of Economics, holds a doctorate from Oxford University and is a part-time professor at the University of St. Andrews (Scotland).

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