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Tag Archives: budget

It’s Finally Time for German Fiscal Stimulus

TweetSeptember 30, 2019 — As long as the German economy was doing well, as it was during the recovery from the 2008 global financial crisis, there existed a coherent rationale for German fiscal austerity.  The national commitment to budget discipline was enshrined in the 2009 “debt brake,” which limits the federal structural deficit to 0.35% of GDP, and by the 2011 “schwarze Null” (that is, “black zero”) policy of fully balancing the budget.  Indeed Angela Merkel’s government proudly...

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Around the budget traps

Budget lock-up on Thursday was fun. I didn't get to ask Minister Robertson whether he still had confidence in his Treasury Secretary, but it probably would have been rude to ask.  A few bits from me on it over at the Spinoff, our Insights Newsletter, and over in the Stuff newspapers - I think it ran in both the Dom and the Press on Friday. They reversed the headline, but s'all good.The end of my Dom piece: Treasury often undertakes this kind of programme evaluation work, or at least...

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Oh Treasury … again

Tom Puller-Strecker goes through the more likely explanations of the inadvertent partial budget release.  There is speculation Budget documents may have been "hacked" by someone simply guessing the website addresses of documents prepared by Treasury but which were not yet supposed to be visible on its website.Treasury has been approached for comment on whether that is what may have occurred, or whether the alleged hack might have been more sophisticated. Puller-Strecker's interviewed...

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Why Is the Structural Budget Deficit Blowing Up Since Trump?

The structural, or cyclically adjusted, budget balance has been deteriorating. In accounting terms, what’re the drivers? Figure 1: Structural/cyclically adjusted budget balance as a percentage of potential GDP. Source: CBO, Budget and Economic Outlook, Jan. 2019. Steven Kopits writes: “…spending side. That also appears out of control…” While I agree that the end of the spending restraints is partly at fault, my view is that thus far, the biggest cause of the deterioration is from the...

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When the Textbook Is Right: Implications of the Trump Fiscal/Trade Regime

Today we learned that through March, the Federal budget deficit was 15% larger than the corresponding point in the last fiscal year — as expected given a not particularly stimulative tax cut (so much for tax cuts paying for themselves, as Stephen Moore claimed) and the ending of spending restraints. The dollar remains at elevated levels, as interest rates have risen. The trade deficit, excluding petroleum, continues to deteriorate. As I explained to my macro class today… it’s all textbook...

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The Lesson from George H.W. Bush’s Tax Reversal

Dec. 13, 2018 —  When President George H.W. Bush was laid to rest earlier this month, the remembrances appropriately remarked on his general decency and competence.  In public commentary, the encomiums tend to be followed by a “but.”  For journalists and historians, it is “but he was only a one-term president.”  He lost the election of 1992, in part because of the recession of 1990-91.  For members of his own political party, the “but” is, “but he broke with the legacy of Ronald Reagan...

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Reply to an MMT critique of my column on pro-cyclical policy

Aug. 30, 2018 — I received an invitation from Paul Fagan to respond to a critique by Bill Mitchell of my column at Project Syndicate and the Guardian, “US will lack fiscal space to respond when next recession comes”.   (My subsequent blogpost, “The next recession could be a bad one” is a slightly extended version.)  I am happy to respond to the critique. As my column made clear, I don’t know when the next recession will come or what will cause it. I take as given that someday there will...

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The Return of Global Imbalances (As Foretold)

Nearly a year ago, I asked Are Global Imbalances a Source of Concern?. At a minimum, we know they’re back. And the IMF certainly thinks so. Figure 1 from IMF External Sector Report, 2018 Their reasoning is documented in the voluminous external sector analysis, entitled “Tackling Global Imbalances amid Rising Trade Tensions”, released yesterday. In IMF Chief Economist Maury Obstfeld’s blogpost, he asks: “How to tackle imbalances?”, and provides the following answer: In the current...

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How UK deficit hysteria began

Laura Basu has a good bookjust out on UK media coverage of events from the Global Financial Crisis (GFC) until 2015, which I have reviewed for Open Democracy. Among other things, it tells the story of how what Mark Blyth callsthe ‘biggest bait and switch in history’ happened in the UK. Laura argues that it can be dated almost exactly to the Budget of April 2009. That the right wing press would start talking about the horrors of the rising UK deficit is no surprise. Osborne had decided in the...

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An Economic Platform for the Democrats

May 27, 2018 — Democrats are gearing up for the November mid-term elections, in which they hope to take back the US House of Representatives.  Candidates are finding that the voters are not necessarily paying close attention to foreign affairs or even Trump scandals, and are more concerned about “pocketbook issues.”   The conventional wisdom still stands:  underlying the shock election of Mr Trump was the worry by the median household that it has been left behind by globalization and...

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