Letter to the Times: David Peel makes the case for cash vouchers
Published 24 May 2012
In a letter to the Times on 24 May, David Peel, Professor of Economics, makes the case for cash vouchers:
“It is surely time that the Monetary Policy Committee tried handing cash vouchers directly to households as a component of the next round of quantitative easing, which looks imminent given their central forecast of inflation is below target in two years' time and the latest retail sales data (report, hetimes.co.uk, May 23).
“Charlie Bean, the Bank of England deputy governor, has previously rejected the voucher idea on the ground that it would be "very largely saved". Recent work suggests that the overall propensity to consume from transitory income changes might well be larger than Mr Bean acknowledges.
“Of course the vouchers could be concentrated on households with incomes up to say £40,000, to increase the likelihood that a greater amount would be spent. The risks of such a policy, say £250 per household, look minimal in the context of the current situation and forecasts.”
PROFESSOR DAVID PEEL
Department of Economics, Lancaster University Management School