tag:blogger.com,1999:blog-2546602206734889307.post1732676681120075148..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: Looking for a Robust Defence of AusterityMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger26125tag:blogger.com,1999:blog-2546602206734889307.post-12520122596367611162013-03-17T11:56:11.965+00:002013-03-17T11:56:11.965+00:00It is beginning to look like there are signs of th...It is beginning to look like there are signs of the start of a U turn on austerity judging by the budget leaks today.Andrew Maclarenhttps://www.blogger.com/profile/15707368897094597072noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-57264735347225405792013-03-14T23:31:43.758+00:002013-03-14T23:31:43.758+00:00That's what the Republicans in the US do part ...That's what the Republicans in the US do part of the time. (Now they've mostly moved on to crazier policies based on end-times theology, though.)Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-79079054190968863482013-03-14T23:30:18.389+00:002013-03-14T23:30:18.389+00:00"If growth from fiscal stimulus is 'perma..."If growth from fiscal stimulus is 'permanent' we should be able to attribute the entire US GDP to previous deficit spending."<br /><br />There is actually a strong long-term argument that this is true -- all of US GDP is dependent on previous money-printing, of one sort or another.<br /><br />Most business activity requires money to circulate, and that requires someone to print or coin money. The modern form of that is "deficit spending".<br /><br />It's really that simple.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-60310732262559892742013-03-14T23:28:25.336+00:002013-03-14T23:28:25.336+00:00As Martin Wolf pointed out, there IS a magic money...As Martin Wolf pointed out, there IS a magic money tree.<br /><br />It's called the Bank of England and it prints money. Magic! Or, not magic at all.<br /><br />Cameron is an idiot. Can you get rid of him somehow?Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-67458534516905632682013-03-13T19:51:02.100+00:002013-03-13T19:51:02.100+00:00That would be why just about every advocate of sti...That would be why just about every advocate of stimulus spending who's ever lived has advocated either well-defined (and preferably necessary) infrastructure projects, or robust automatic stabilizers, as the stimulative instruments of choice, in large part because those are self-limiting. Pedro Diasnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-86988960727977928782013-03-11T19:39:08.662+00:002013-03-11T19:39:08.662+00:00Ok that's fine.
Still we cannot run away from...Ok that's fine.<br /><br />Still we cannot run away from the fact that running a deficit all those years when the economy was doing pretty ok meant we couldnt muster a half decent response to the financial crisis. <br /><br />Nobody comes out of this well. The Tories plan isnt all that clever but in fairness to them they did inherit a terrible problem (the reason why the public kicked out Labour in the first place, if inconclusively).<br /><br />Plus your chart shows figures in percentages(?). This doesnt tell us much because in a situation where a recession knocks off 4/5 years worth of growth from GDP, percentages wont tell us very much.Feyinoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-8871112110264975972013-03-11T15:45:52.858+00:002013-03-11T15:45:52.858+00:00"If growth from fiscal stimulus is 'perma..."If growth from fiscal stimulus is 'permanent' we should be able to attribute the entire US GDP to previous deficit spending."<br /><br />Say what? Why should that be? Explain!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-84703957585675736392013-03-11T13:20:06.161+00:002013-03-11T13:20:06.161+00:00I don't know what you mean by growth being &qu...I don't know what you mean by growth being "permanent". This is an odd argument indeed: a bit like saying if a building is built properly it ought to be indestructible even if you subsequently send in a demolition crew to knock it down. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-69843613954523511292013-03-11T01:00:40.236+00:002013-03-11T01:00:40.236+00:00The claim that it was Labour profligacy, rather th...The claim that it was Labour profligacy, rather than the financial crisis, that left a terrible legacy must apply to the level of debt, or the level of the deficit, in 2007. The chart shows it applies to neither.Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-11003166647083938162013-03-10T22:57:37.384+00:002013-03-10T22:57:37.384+00:00What does the chart you posted in the first point ...What does the chart you posted in the first point even mean and why are you comparing the structural deficit with 'net debt'?<br /><br />Surely you are not going to deny that in the early years of Labour they carried on with the plans they inherited from the conservatives before turning on the taps in 2000??<br />How does this then differ with what the PM is saying? Did they or did they not go on a spending spree from 2000? <br />Instead you have chosen to spin this as 'the reduction Labour achieved in their early years' sigh. <br /><br />Feyinoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-41438270541771813622013-03-10T09:48:10.325+00:002013-03-10T09:48:10.325+00:00Skidelsky in his column 'Models Behaving Badly...Skidelsky in his column 'Models Behaving Badly' (at Project Syndicate) quotes the OBR as saying βthe average [fiscal] multiplier over the two years would have needed to be 1.3 β more than double our estimate β to fully explain the weak level of GDP in 2011-12.β Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-66887100244111740802013-03-10T00:11:17.100+00:002013-03-10T00:11:17.100+00:00>The argument that by borrowing more you may en...>The argument that by borrowing more you may end up borrowing less has been set out by DeLong and Summers. <br /><br />Having borrowed $16 trillion already, it is difficult to see why the US should need to borrow any more at all. If growth from fiscal stimulus is 'permanent' we should be able to attribute the entire US GDP to previous deficit spending. If it is not permanent then the argument completely falls apart (which is what the CBO assumes when projecting debt-to-GDP in the event of fiscal stimulus, or when calculating the time scale of different types of fiscal stimulus events).Misakinoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-39637028244896244042013-03-10T00:08:16.954+00:002013-03-10T00:08:16.954+00:00>So why is it good for the private sector to bo...>So why is it good for the private sector to borrow more to invest in good projects when the cost of borrowing is cheap<br /><br />With corporations awash in cash, the only reason for corporate borrowing is the tax advantage. Which, of course, hurts tax revenues but maybe there is still a reason for it.<br /><br />Governments do not obtain a tax advantage from borrowing because they do not pay taxes.<br /><br />(Job creation without government spending or inflation: http://jobcreationplan.blogspot.com/)Misakinoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-8367335039230356012013-03-09T20:30:55.815+00:002013-03-09T20:30:55.815+00:00Awesomeness: "As they had austerity built in ...Awesomeness: "As they had austerity built in to their forecasts of 2010, then they have naturally looked elsewhere for events they were not expecting."<br /><br />Bravo!Steve Schrannoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-21314410860396317382013-03-09T12:04:31.761+00:002013-03-09T12:04:31.761+00:00This is a very useful article, thanksThis is a very useful article, thankschris johnsonhttps://www.blogger.com/profile/16210890033354730381noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-66060978410443593452013-03-08T17:51:54.952+00:002013-03-08T17:51:54.952+00:00"it was driven by persistent, reckless and co..."it was driven by persistent, reckless and completely unaffordable government spending and borrowing over many years.". Spending, which, of course, Cameron and Osborne promised to match in 2007; see http://news.bbc.co.uk/1/hi/uk_politics/6975536.stm<br /><br />Not much of an advert for Eton and Oxford, is he ?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-91786326050465302662013-03-08T17:36:42.601+00:002013-03-08T17:36:42.601+00:00The graph should say that the figures are Percent ...The graph should say that the figures are Percent GDP.crfhttps://www.blogger.com/profile/10726414637021391906noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-66354539537998947582013-03-08T16:51:06.018+00:002013-03-08T16:51:06.018+00:00I know now that academic standards are being erode...I know now that academic standards are being eroded and not by the 'state sector'. I doubt if DC's arguments would have got a pass in PPE prelims 50 years ago!! Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-53602910611634445762013-03-08T15:50:22.258+00:002013-03-08T15:50:22.258+00:00Maybe OBR read SWL and have been stung into a repl...Maybe OBR read SWL and have been stung into a reply by such a blatent misrespresnetation of their views. Nice thought.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-70763251212571207802013-03-08T14:54:35.847+00:002013-03-08T14:54:35.847+00:00The OBR have just announced that the PM misreprese...The OBR have just announced that the PM misrepresented their views on impact of austerity on growth. Hooray for semi-independent fiscal councils!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-70562714179523879062013-03-08T12:46:55.126+00:002013-03-08T12:46:55.126+00:00How big and PERSISTENT the spending multipler has ...How big and PERSISTENT the spending multipler has to be to make expansionary fiscal policy not a burden in the future?<br /><br />I put enphasis on persistence because it should also be taken into account that government spending increases are very hard to cut in the future, so this increased spending would stick around. Therefore, the desirability of expansionary fiscal policies does not depend only on the impact spending multiplier, much talked about, but also on the future response to current and persistent spending increases.Alessandro Mennuninoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-43074777948249773022013-03-08T12:46:13.342+00:002013-03-08T12:46:13.342+00:00But there is a magic money tree ! Where does the m...But there is a magic money tree ! Where does the money for QE come from, if not the magic money tree ?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-71774289629435085142013-03-08T12:24:45.016+00:002013-03-08T12:24:45.016+00:00Yes, if you borrow more now, you may need to borro...Yes, if you borrow more now, you may need to borrow less in the future. Is that so strange? Yes, if the government borrows more now, households need to borrow less. Is that so absurd? One "borrowing" is not another "borrowing". In fact, the PM started his argument by saying that more borrowing in the past somehow should result in less borrowing now, so that's a case in saying that it does make a difference when you borrow. But yes, if you leave out crucial qualifications in your description of "facts" than those facts tend to sound absurd. But that does not mean they are absurd, it means your argument is absurd (or disingenuous).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-19033013010654112322013-03-08T12:19:45.221+00:002013-03-08T12:19:45.221+00:00Its even more worrying that the is happy that peop...Its even more worrying that the is happy that people can buy houses with 5% deposit and low interest rates.<br />On one hand he does not want to borrow more but the same time he is pushing people into negative equity just to support the housing ponzi scheme..<br /><br />If anything else, this behaviour will overinflate the existing inflated market and the crash would be even more severe.<br /><br />Short-termism is the name of the game.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-25097184378623511392013-03-08T11:12:28.917+00:002013-03-08T11:12:28.917+00:00I have to see the policies being about a deliberat...I have to see the policies being about a deliberate attempt to reduce the size of the state, a long term policy of the party. It explains selling off many assets during the Thatcher years as well as austerity now.<br /><br />The current financial climate is just the pretext.Chris Wheelernoreply@blogger.com