tag:blogger.com,1999:blog-2546602206734889307.post4515021588082533029..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: But do the numbers add up?Mainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger19125tag:blogger.com,1999:blog-2546602206734889307.post-87192689304212698982017-05-25T09:48:03.379+00:002017-05-25T09:48:03.379+00:00I feel your persistent dyslexia should be treated....I feel your persistent dyslexia should be treated. I assume that this time you misread it as "Mains Macron" but then got hoist by your own disability . . .David Simpsonhttps://www.blogger.com/profile/03500785789370327838noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-64074774187553443742017-05-22T15:12:42.574+00:002017-05-22T15:12:42.574+00:00Fantastic article for someone who is quite ignoran...Fantastic article for someone who is quite ignorant about economics in general (me!). Thank you.Amelia Thomashttps://www.blogger.com/profile/06014993441891959046noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-42529479592749657292017-05-20T07:36:55.397+00:002017-05-20T07:36:55.397+00:00Many thanks - I really appreciate the clarity of y...Many thanks - I really appreciate the clarity of your argument which helped me come to grips with (a) some things I'd felt but hadn't consciously formulated, or not formulated for a while (the advantage of near-zero interest rates), and (b) other things I hadn't thought about at all (the fact that it doesn't matter that renationalisation costs hadn't been covered)David Beesonhttps://www.blogger.com/profile/00393977902379776532noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-58174312889562400782017-05-18T21:04:37.163+00:002017-05-18T21:04:37.163+00:00One would have thought that at least the F.T. has ...One would have thought that at least the F.T. has journalists who could provide a thorough analysis of the macroeconomic aspects of the manifesto, and who would be interested in doing so. I think I read all their articles on the Labour manifesto. I only saw a few lines that mentioned the overall deficit and debt framework in passing, with no real attempt at analysis. This compared with lengthy detailed discussion of the tax plans.<br /><br />If even the F.T. can't be bothered to take the macroeconomics seriously, there seems little hope that the rest ofthe media will.<br /><br />Almar.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-39011028626990677172017-05-18T15:57:09.005+00:002017-05-18T15:57:09.005+00:00'How much will it cost?' is a good questio...'How much will it cost?' is a good question.<br />It is just being asked in the wrong sense.<br />Just look at Venezuela and see that state control of economic activity comes at a high cost.StuartPhttps://www.blogger.com/profile/13748038209546648459noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-42787839830797027742017-05-18T15:09:05.522+00:002017-05-18T15:09:05.522+00:00An interesting read for a layman such as me. Inter...An interesting read for a layman such as me. Interestingly the Tories produced a document, using their own formula, that shows a rather large black hole in the sums. I'm curious if the same formula used by the Tories to the Labour manifesto was applied to the Tories claimed fiscal performance over the last 5 what it would show?Geoff Roughtonnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-51234158853789687982017-05-18T13:02:06.013+00:002017-05-18T13:02:06.013+00:00There is a good blog post on the BBC, the Labour P...There is a good blog post on the BBC, the Labour Party and this election at the LRB 'Post-Democratic Broadcasting' by Tom Mills, 18 May 2017.<br /><br /><br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-31045834652164241812017-05-18T09:17:54.435+00:002017-05-18T09:17:54.435+00:00Ask Labour politicians why they think the industry... Ask Labour politicians why they think the industry would be more efficiently run under public ownership. quite. define "public". David Simpsonhttps://www.blogger.com/profile/03500785789370327838noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-67086094213074368982017-05-17T22:28:16.632+00:002017-05-17T22:28:16.632+00:00I was wondering about your comment about the ZLB a...I was wondering about your comment about the ZLB and spending matched by taxes in the context of a DSGE model.<br /><br />Are there models were you get that sort of multiplier effect -- without presuming an irrealistic lump sum tax? Stéphanenoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-37642022923663782912017-05-17T20:53:02.838+00:002017-05-17T20:53:02.838+00:00On the BBC News tonight (17/5/17) Kamal Ahmed'...On the BBC News tonight (17/5/17) Kamal Ahmed's report on the pay squeeze didn't mention Brexit once. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-40697374397949792882017-05-17T20:44:20.993+00:002017-05-17T20:44:20.993+00:00The investment is welcome, but the business tax ri...The investment is welcome, but the business tax rises didn't convince me at all in the context of Hard Brexit, supported by Labour.Tubby Isaacsnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-36863769942423312962017-05-17T15:14:34.905+00:002017-05-17T15:14:34.905+00:00Thank you for writing this: the media are driving ...Thank you for writing this: the media are driving me nuts.Timhttps://www.blogger.com/profile/01406931005980867182noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-72544597649735868292017-05-17T15:04:33.851+00:002017-05-17T15:04:33.851+00:00A bullseye.
The IFS uses the dog-whistle word &q...A bullseye. <br /><br />The IFS uses the dog-whistle word "competitive" when it comes to tax rates, e.g. here https://twitter.com/HelenMiller_IFS/status/862262415928545280 <br />which is also the result of their 'not doing macro' - leading them into the fallacy of composition: assuming that better fortunes for the corporate sector translates automatically into better fortunes of the economy as a whole. Which clearly ain't so, given that lots of corporate profit is (financially) extracted from other parts of the economy. Fabulous article.Nicholas Shaxsonhttps://www.blogger.com/profile/16975154273054074389noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-85603035266937294422017-05-17T14:37:14.498+00:002017-05-17T14:37:14.498+00:00I was thinking about this earlier. Whilst I accept...I was thinking about this earlier. Whilst I accept that the multiplier effect could work for the Labour party, I'm not sure how many of their spending plans would directly increase growth. Nationalisation is a transfer of ownership, though there is the potential to offset costs against revenue that doesn't really add to gdp. the replacement of loans for university fee with grants won't have much impact. Because the repayments are fairly small anyway, and the impact would take a few years to come into effect anyway.<br /><br />Removal of the bedroom tax would have a small impact, but too much of this money is being spent on right past Tories injustices, as they see it , rather than being directly used for growth. <br /><br />So that is a lot of extra taxation, especially on businesses, for not much increase in gdp.<br /><br />You're right in principal, but when I looked I couldn't see that many Labour spending commitments that would have an unquestionable impact on growth, even those that might are extremely dependent on the competence of those carrying out the policies. Sorry.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-68608671768046194242017-05-17T10:11:38.119+00:002017-05-17T10:11:38.119+00:00The balanced budget multiplier was a cute construc...The balanced budget multiplier was a cute construct in its day. But in an open economy where the government is fully sovereign it is an irrelevant idea to resurrect.<br /><br />Once you open the economy and have income-sensitive tax revenue then the leakages are much higher and this reduces the overall impact of the spending increase on aggregate demand and while the multiplier remains positive it is much lower than 1.<br /><br />Shiller must have dug out an old 1950s or 1960s American macroeconomics text-book which derived all the main macroeconomic results as if the economy was closed. In those days, the external sector and trade were often examined in the closing chapters. This was justified by the fact that the US economy was a large and fairly closed economy.<br /><br />He also makes some very large assumptions about the external sector.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-88512121918457121902017-05-17T10:05:37.717+00:002017-05-17T10:05:37.717+00:00Earlier today, I heard Camilla Cavendish (once of ...Earlier today, I heard Camilla Cavendish (once of the No. 10 Policy Unit) assert on the "Today" programme that "we can't afford to borrow any more". I sent a tweet to her asking why not, when real interest rates are negative, and debt service costs as a % of GDP are at historically low levels. As yet I've had no reply.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-34892911447071577472017-05-17T09:56:03.795+00:002017-05-17T09:56:03.795+00:00One the nationalization front, I think it's ha...One the nationalization front, I think it's hard to argue that there is no embedded cost in the process. The proponents are basically arguing we should distribute the sector profits as either better services or lower fares.<br /><br />To argue that the utility and transport sector would generate similar returns under state ownership is equivalent to state that they would be run under the same profit motive they would be in the private sector. This seems unlikely to me.<br /><br />If you purchase a business with the explicit promise you will push its margins to zero, then the purchase cost is the actual cost: you are promising to never generate any profits.<br /><br />Nationalization in itself does not increase the deficit I agree. Running those companies with the aim to break even definetly would.<br /><br />So you'd ever have no change in the service (which would kinda break the promise they make) or we'd get less profits from the sector.<br /><br />Of course you could imagine that the government could somehow increase the underlying sector productivity. While I agree privatization is unlikely to do much for that, I very much doubt nationalisation would do that....Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-91563923444784178432017-05-17T09:02:46.522+00:002017-05-17T09:02:46.522+00:00Great post - two correct non-trivial propositions ...Great post - two correct non-trivial propositions that need repeating:<br /><br />1. The IFS is not the font of all wisdom. You're right they pretty much make a virtue of not having any macro-economists. They are surely incompetent when assessing macroeconomic consequences.<br /><br />You might also have pointed out that the actual evidence on aggregate investment is that it is substantially more sensitive to GDP than to price effects (as embodied in interest and tax rates). <br /><br />2. A balanced budget is neither necessary or sufficient as a criterion for evaluating policy. Yes on average in the long run. But surely not at a point in time when the returns to investment exceeds their costs - as any decent manager in the private sector will tell you. A really simple argument apparently beyond the ken of any of our media.<br /><br />When the 1945 Labour administration surveyed the post-war macroeconomic situation - with public debt at 200% of GDP - twice what it is now - what did it do? It invested. Why? Because there were clear returns to doing so. It built the NHS and the modern welfare state - social security in the best sense of the words - and subsequent growth in real GDP per capita for the next 15 years averaged over 3%.<br /><br />Please please keep on banging the drum!Magnusnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-72012026576424985822017-05-17T08:19:49.121+00:002017-05-17T08:19:49.121+00:00I was expecting to see something written in French...I was expecting to see something written in French about Simon Wren-Lewis's hands, but then I realised I misread the title of the blog as "Mainly Macro" ...Anonymousnoreply@blogger.com