tag:blogger.com,1999:blog-2546602206734889307.post7028806445356587778..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: Fiscal tightening in UK recessions: 1981 and 2010 comparedMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-2546602206734889307.post-14417976998857816642019-08-08T18:30:08.658+00:002019-08-08T18:30:08.658+00:00This question is not directly related to this post...This question is not directly related to this post but I wanted to ask you since you have written extensively on fiscal rules and golden rules in particular. A common argument in the early 2000s against golden rules that exclude net investment was that net investment is hard to measure because public capital depreciation is hard to estimate. What do you think? Is it true? Or was it true in the early 2000s but now we are better at estimating depreciation? Or was it never true?<br />Alvarohttps://www.blogger.com/profile/16655313304083374778noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-1746097576017071492019-08-06T21:58:35.351+00:002019-08-06T21:58:35.351+00:00Very well put indeed. And with rates so low; QE.Very well put indeed. And with rates so low; QE.Fabiohttps://www.blogger.com/profile/02626804603479699414noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-90791552546963758592019-08-04T03:48:36.627+00:002019-08-04T03:48:36.627+00:00Shouldn't it be Howe/Lawson versus Osborne, or...Shouldn't it be Howe/Lawson versus Osborne, or Thatcher versus Cameron? Or are you claiming that Thatcher had more direct involvement in the budget than Cameron did? (In the latter case, it's perhaps hard to tell Cameron and Osborne apart, given how well they got along with each other.)Colinhttps://www.blogger.com/profile/17472849515808155408noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-1901201683734530812019-08-03T14:56:07.221+00:002019-08-03T14:56:07.221+00:00The UK economy of 1981 was very different to the U...The UK economy of 1981 was very different to the UK economy of 2010.<br /><br />The 1981 economy still had a large domestic consumer goods sector and other manufacturing. A spending cut in 1981 causes large multiplier effects as the UK consumer goods sector cuts back shutting factories laying off workers so amplifying the effects of the fiscal shock.<br /><br />The UK economy of 2010 is already importing most consumer goods. A fiscal contraction causes a reduction in imports or a change in the mix of imports. The factories are already shut so that feedback loop is reduced.<br /><br />The lesson here is with a post manufacturing service economy it takes a bigger fiscal shock to drive the economy into recession. Also it will take a bigger fiscal expansion, or a more carefully targeted fiscal expansion to generate some reasonable growth.<br /><br />1981 was a worse economic mistake than 2010. If 1981 had not happened the structure of today's UK economy would be stronger. It would have a bigger manufacturing sector. The 2010 austerity was a terrible and unnecessary economic mistake, but it leaves the structure of the UK economy unchanged. The real damage was done under Thatcher and Blair.<br /><br />In today's UK economy the factories that will open to supply increased demand will be located in China.Ringo Kidnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-79852775874464463192019-08-03T12:49:54.395+00:002019-08-03T12:49:54.395+00:00Please continue to post new blog article links on ...Please continue to post new blog article links on Twitter. I need that reminder to check.Robert Dysonhttps://www.blogger.com/profile/05512326175916762262noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-4163819514186990292019-08-03T11:38:40.269+00:002019-08-03T11:38:40.269+00:00Well, it's the usual simple story: given a fix...Well, it's the usual simple story: given a fixed inflation target, G Osborne kept the real economy in semi-recession, to ensure that the BoE would be "forced" to pump up the asset markets to counter that with "wealth effect" spending. He even stated this tersely:<br /><br />“<i>A credible fiscal plan allows you to have a looser monetary policy than would otherwise be the case. My approach is to be fiscally conservative but monetarily active.</i>”<br /><br />But that of course is not "austerity", but redistribution from people long labour and short assets to people long assets.Blissex2https://www.blogger.com/profile/05849329792782072250noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-44259223590410660722019-08-03T10:09:40.836+00:002019-08-03T10:09:40.836+00:00The invisible bond vigilantes argument that sustai...The invisible bond vigilantes argument that sustained the Tories since 2009 seems to be faltering, given that Trump is increasing US borrowing to over 110% and they don't seem to find that ineffective. <br /><br /><br />Anonymoushttps://www.blogger.com/profile/02197568488716521989noreply@blogger.com