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Presentation by Alex Shirvani, Assistant Economist, BIS, October 2013TRANSCRIPT
GOVERNMENT ECONOMIC SERVICE
Making economists betterMaking better use of economics
GES
UNCLASSIFIED
GES presentation
Alex ShirvaniAssistant Economist, BIS
• Economics in Government • What government economists do• The GES as a career• How to get in
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Economics of Government Intervention
The First Rule of Welfare economics:
A perfectly functioning market will lead to a Pareto efficient outcome:
The most efficient factor mix is used in production
The right things are produced given existing factors
Things are consumed by people that value them most
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Economics of Government Intervention
Making the UK economy more efficient means:
We produce more given the resources and factors we have
We use the factors better (people have jobs suited to their skills)
We produce things where we have a comparative advantage
We have more things to export abroad
The UK is better off
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Efficiency interventions
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Market failuresIf there’s a market failure, government may be able to correct it
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Imperfect competition Energy markets, transport
Externalities Negative: pollutionPositive: research spillovers, social benefits from education
Asymmetric information
Healthcare, credit markets, some consumer markets, moral hazard problems in banking
Public goods National defence, street lighting, criminal justice system
Tackling market failures
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Information, education and advice
Publishing league tables, crime statsPublic education campaigns: ‘talk to Frank’LabellingAdvisory servicesReporting/disclosure requirements
Direct provision Providing policing, armed forces, bird flu vaccineCommissioning private sector to carry out contracts (eg private prisons)
Tackling market failures
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Economic instruments Taxes, chargesSubsidies, grants, tax creditsTradable permitsGovernment loan guarantees
Regulation and legislation
Rail fare, utility price regulationCompulsory motor insuranceTrading standards, health & safetyBanning tobacco advertising
For more on this google “Understanding Policy Options” for a fantastic pdf document.
Equity interventions
Equity
A Pareto efficient outcome might not be particularly ‘equitable’
It is Pareto efficient if one person has everything!
Government may also intervene for reasons of ‘equity’ (ie redistribution of wealth) to tackle social deprivation
- Providing free prescriptions - Extra money for schools in deprived areas- Fee incentives to encourage access to HE from poorer students
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Long run growth interventions
Static growth comes from Pareto improvements (making markets function better)
Dynamic growth comes from the factors in the Solow model:
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Physical capital accumulation
Infrastructure: transport, airports, buildings, incentivising private investment in capital & providing effective markets for credit
Technological progress
Research & development, patents, science/technology, innovation, start-ups
Human capital accumulation
Schools, colleges, universities, vocational training
Appraisal and evaluation
Before a policy is brought in, government economists carry out an appraisal of the options:
What are the likely impacts?Who is going to benefit / who is going to lose?Is it worth doing this intervention?What is the best way of doing it?
After it is brought in, economists do an evaluation of the policy:
Is it working? Do we need to modify it?
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Appraisal and evaluation
The economist is looking for the net present value of all the benefits minus all the costs
Cost-Benefit analysis:
Costs:Exchequer cost – what it costs the taxpayerEconomic cost – the opportunity cost to society of resources being diverted from other uses
Benefits:Additionality – the true economic benefit when you’ve taken off:Deadweight – activity that would have happened anyway but govt has now paid for it!Displacement – activity that has just taken away someone else’s market shareLeakages – benefits that go to someone you didn’t intend them to!
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Appraisal and evaluation
Cost-Effectiveness analysis:
Set a target goal: (eg ‘provide 500 jobs’ or ‘create housing for 1000 people’)
Find out what is the cheapest option of delivering that goal, regardless of other benefits
Often used in healthcare with QALYS (Quality Adjusted Life Years)
Google “HM Treasury Green Book” for more information on this
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Other things we do
Writing evidence papers- ‘what is the evidence base on…?’
Managing surveys or statistical releases- eg English Business Survey, UK Trade Figures
Commissioning research papers- putting research out to tender and project managing it
Economic support for Ministers- written and oral Parliamentary Questions- briefings and submissions
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Career pathAssistant Economist (£26k-32k)- Rotate jobs every year in your department- After 2 years can move department- After 2 years may be opportunities for funded MSc Economic Adviser (Grade 7; £45k +)- No longer rotate jobs- Significant responsibility, lots of economics
Grade 6- Still an economist but more ‘strategic’ role
Senior Civil Service
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Application timetableApply for the Economist stream of the Analytical Fast Streams
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Registration Monday 30 September 2013
Online practice tests (7 days after registration)
Online selection tests (7 days after practice tests)
Online application form (7 days after online tests)
Economic Assessment Centre October / November 2013
Fast Stream Assessment Centre December 2013
Or apply Round 2 (opens Monday 17th February 2014)
Economic Assessment CentreGo to the EAC Open Day!
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Technical report Pre released topic: write for economists
Plain English report Same topic: write for non-economists
Short Answer Questions 10 SAQs
Interview 10 min presentation on report, 10 min follow up questions, 20 min on SAQs, 20 min on strongest topic
Non economics exercise Lots of reading: summarise a policy response (counts to FSAC not EAC)
Fast Stream Assessment Centre
Full day of exercises to test a series of competences
This is being changed this year so check the website and await the FSAC guide (pdf) for more details
The competences (from Civil Service Competency Framework) are already up on the website so start looking to get an idea
Previous exercises: interview, group exercise, written policy recommendation, oral briefing exercise
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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Find out moreLook on the GES website: http://www.civilservice.gov.uk/networks/ges
Check out the HM Treasury Green Book: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220541/green_book_complete.pdf
Read Understanding Policy Options: http://tna.europarchive.org/20071206133532/homeoffice.gov.uk/rds/pdfs06/rdsolr0606.pdf
Look on the Economy part of the ONS website: http://www.ons.gov.uk
They produce good stuff on Twitter and Facebook so worth ‘liking’
Also check out The Economics of the Welfare State (Nicholas Barr)
GOVERNMENT ECONOMIC SERVICEMaking economists betterMaking better use of economicsGE
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