tag:blogger.com,1999:blog-2546602206734889307.post1378862134865418243..comments2024-03-29T12:16:15.785+00:00Comments on mainly macro: Is pessimism about European debt levels justified?Mainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2546602206734889307.post-30151168052161853452014-08-26T13:51:27.173+00:002014-08-26T13:51:27.173+00:00One thing to note here is that we are talking abou...One thing to note here is that we are talking about debt and the calculations done here assume implicitly the a primary surplus is either constant or will be distributed in its entirety no matter how high it is which is obv not the case. so the expected primary surpluses should be a little higher to ensure stability of sustainability. Makrointelligenzhttps://www.blogger.com/profile/07305478203133746792noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-12276266367395226642014-08-11T10:45:06.245+00:002014-08-11T10:45:06.245+00:00Also worth thinking about why difficult to get pri...Also worth thinking about why difficult to get primary surplus up. Depends on standard thinking about tax levels and sources. See http://www.futureeconomics.org/2012/01/austerity-is-political/ and http://www.futureeconomics.org/2012/07/keynes-is-all-we-need/diarmid weirhttps://www.blogger.com/profile/16073514967921006788noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-65040295383964476682014-08-11T07:34:52.420+00:002014-08-11T07:34:52.420+00:00For advocates of Modern Monetary Theory, this is a...For advocates of Modern Monetary Theory, this is all a storm in a tea cup, and for the following reasons.<br /><br />1. If the private sector wants to hold a larger stock of government liabilities than in recent decades, then government should let it, and pay a miserable rate of interest. Indeed, if government DOES NOT supply the private sector with those private sector assets / government liabilities, the private sector will go into Keynsian paradox of thrift savings mode, which will raise unemployment.<br /><br />2. Alternatively, if the private sector DOES NOT WANT to keep an elevated stock of government liabilities, it will try to spend it away, which will raise demand excessively. In that circumstance, government can run a surplus without causing a recession. In fact government will be more or less FORCED to run a surplus in order to contain inflation.<br /><br />Problem solved. In fact in a sense, governments ARE FORCED to adopt the above MMT policy and just ignore the whining that we get from the Eichengreens of this world. Incidentally, the above points are relevant for monetarily sovereign countries and the EZ as a whole. INDIVIDUAL countries within the EZ are slightly different.<br /><br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-995839048332003832014-08-10T22:00:39.197+00:002014-08-10T22:00:39.197+00:00Important post in the line of a recent book on Por...Important post in the line of a recent book on Portuguese government ability to pay the public debt service http://www.bnomics.pt/products/vamos-conseguir-pagar-a-nossa-divida-publica. However, I would prefer to use Eurostat data concerning gross public debt http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&language=en&pcode=tsdde410&plugin=1. CongratulationsAnonymoushttps://www.blogger.com/profile/16820032624481604225noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-49063614890534702092014-08-10T19:47:45.478+00:002014-08-10T19:47:45.478+00:00"Looking at debt levels and actual primary su..."Looking at debt levels and actual primary surpluses, the one country that really looks worrying is not in the Eurozone, but Japan."<br /><br />We should not look at it this way. Japan is a net-creditor in the international system. It has a large private sector surplus. If it chooses to have its surplus savings channelled into large government debt, which is invested in things like education and health that is its business. It does not owe money to others in other currencies. Even if its private surplus runs down as it ages, so what? That is what it has been stocking up for.<br /><br />The crisis hit Eurozone periphery is another matter. But the debt itself is not the problem. It is a symptom. They have a terms of trade problem which means they have an external payments problem.<br /><br />The only solution for these countries is fiscal union and large scale investment with German capital because they do not want a return to the bad old days of devaluations (liras and drachmas).Anonymousnoreply@blogger.com