tag:blogger.com,1999:blog-2546602206734889307.post8720416331704535033..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: The OBR’s risk assessment lacks contextMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2546602206734889307.post-39273926104572501572017-07-17T22:29:09.452+00:002017-07-17T22:29:09.452+00:00"If we are worried about a debt burden on fut..."If we are worried about a debt burden on future generations, does it make sense to put all that burden on a current, already disadvantaged, younger working generation? "<br /><br />Hi professor, thank you for your blog posts. I learn so much and look forward to reading your posts. <br /><br />Your comment quoted above reminds me of a lecture Nick Stern gave in relation to climate change policy - that the discount rate is an ethical concept, we can't read it off capital markets. I wonder whether the OBR has thought about the rationale for the discount rate it uses. <br /><br />Thanks again for your reasoned and public advocacy for good public policy. <br /><br />KienKienhttps://www.blogger.com/profile/15643929814291369340noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-42123582078195807862017-07-17T14:02:32.888+00:002017-07-17T14:02:32.888+00:00Paul Krugman blog, October 7, 2013, Credibility Al...Paul Krugman blog, October 7, 2013, Credibility All The Way Down<br /><br />"3. It also seems to me that Rogoff has shifted his own argument. In the original piece, it was very straightforward: foreign investors would lose confidence, sending interest rates soaring, which would cause economic contraction. I think, though it’s hard to tell, that he has now dropped that story, replacing it with a fairly amorphous assertion that simple models miss the true nature of risk. OK, I guess, but I do think it’s important to note that Rogoff’s original assertion was that it was all very simple.<br /><br />4. Finally, on Wren-Lewis’s point more than mine: Wren-Lewis pointed out that a country like Britain could easily respond to a run on its bonds via quantitative easing. Rogoff says no, because this would undermine its credibility. I’m being a bit flip here, but as I read this we start with a credibility argument; when there turns out to be an easy way to deal with that problem, it’s rejected because that would undermine credibility. I keep looking for something fundamental, but right now it looks like turtles all the way down."<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-59140217889761418752017-07-17T12:20:49.042+00:002017-07-17T12:20:49.042+00:00It seems to me that there is no clear separation b...It seems to me that there is no clear separation between fiscal risks to sustainability and those of macroeconomic stabilisation; the one is to some extent the obverse of the other.<br /><br />Clearly with rates at the ZLB the use of fiscal policy may be advantageous but there may be an issue with sustainability. The actual record, which you allude to, is that governments do not fix the roof while the sun shines and the debt burden gets ratcheted up over time until at some point it becomes unsustainable and will have a real impact on services which may be affected by the need to pay interest on legacy debts. <br /><br />You are right that the OBR should address these issues but will it?Robert Joneshttps://www.blogger.com/profile/03593742130088640939noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-75791854443753489432017-07-17T08:52:10.515+00:002017-07-17T08:52:10.515+00:00The “consensus assignment” involves increasing fis...The “consensus assignment” involves increasing fiscal stimulus when interest rates are near zero (which in turn tends to raise interest rates) so that come the next recession, the central bank can implement stimulus by cutting interest rates. In short, mortgagors have to pay artificially elevated interest on their debts for years on end, so that central banks can implement their pet form of stimulus, instead of fiscal doing the stimulus (which as pointed out above works perfectly well). Sounds eminently logical….:-)<br /> <br />Or have I missed something?<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com