Personal Blogs

Speaking with Senior Economist James Watson (OBR), via Teams, who the Economist/Data Scientist role reports to, the very first thing I asked him, ten seconds in, was for clarification on this April 2025 working paper which he co-authored alongside Adam Brzezinski (London School of Economics and Political Science) and Arno Hantzsche (Bank of England). What was I thinking? Well, my idea was simply around a so-called No-Ponzi constraint that Dr. Stefan Niemann (University of Konstanz) mentioned to his students in an advanced macro lecture in the old LTB. No-Ponzi is transversal and can exist as a boundary condition on the terminal value of the household budget in the infinitely-lived agent model of the UK economy. However, as James clarified, since its inception in 2010, the OBR has moved gradually towards an overlapping generations (OLG) framework where finite time is considered more pragmatic. As such, the household’s budget has a crucial distinction from the infinitely-lived model. Since the No-Ponzi constraint is an endogenous factor in most neo-classical growth models, which I have encountered, I wanted to know what James thought about its omission from the OBR’s modelling framework – a framework, which the successful applicant will be responsible for upholding and progressing.

The OLG paper is a great read. Just over halfway in you'll find it to be highly nostalgic to some of my previous work on economic growth, and a thrill to review partly because from a 'Labor Econ' perspective, it has two central provisions which fascinate me. First and foremost and importantly, the omission of inheritances, which imply “asset holdings may not be negative,” and secondly, in line with standard Ramsey model intuition – a life-cycle problem which is in-fact an i.i.d stylized fact that accounts for “annual variation in pay” across time in the OLG model. Yes, this is something I mentioned to James. He speaks very eloquently on the model’s structure, which I notice also includes a perfectly-competitive market-clearing wage and a fabled interest rate, which depend on the OLG’s standard transversality condition.

James (unsure if his name is pronounced in Spanish dialect or not) revealed he works alongside three important senior execs within the OBR – one being Richard Hughes, the other being David Miles and last but not least, Tom Josephs, who each form the budget responsibility committee of the OBR and have a good relationship with the organisation. Shortly after, I revealed my approval of the civil service recruiting process to James at that particular juncture. What I found interesting is the time it takes for the OBR to publish its proprietary research. Some 3-6 months it can take and indeed it took James, Adam and Arno that long to publish the OLG paper this month. Hopefully, we can keep the great work going if I am selected to join the OBR team. For now, I look forward to a positive reply from the civil service recruitment team.

Great call.