Poll

Do you believe that your Government should be bold in fiscal consolidation

Yes, austerity measures are needed to gain investors' confidence back
3 (75%)
No, the economy is still fragile and Keynesian policies are still needed
1 (25%)
There should be concerted actions among Governments worldwide to avoid that the world economy goes only in one direction simultaneously
0 (0%)
Other views (please explain in the text below)
0 (0%)

Total Members Voted: 3

Author Topic: Austerity or stimulus?  (Read 655 times)

Napodano

  • Administrator
  • PFM Member
  • *****
  • Posts: 681
Austerity or stimulus?
« on: August 23, 2010, 07:25:40 GMT »
The economic press is full of articles about the risk of a double-dip recession.

Some argue about the need to sustain stimulus interventions. We may ascribe Barack Obama and Ben Bernanke among those (a stand that caused the departure of the Head of the Office of Management and Budget). Others are more  hawkish and believe that a strong fiscal tightening will reassure investors and get the engine of growth going again. We should include here David Cameron and George Osborne.

Now, here at PFM Board, we like to take a stand. So participate in the above poll and make comments about your choice.

I myself voted in favour of austerity. Why? read the attached article from the Economist Fiscal fundamentalists - Austerity or stimulus? Some economists have much more extreme views than that on the Aug 12th 2010 edition.

QUOTE
----------
Conventional measures of public debt show the legacy of past borrowing. Generational accountants look far into the future as well. They tally how much the government can expect to collect from present and future generations, through taxes and the like, and how much it can expect to spend on them. The fiscal gap is the difference between the two, expressed as the amount the government would have to set aside today to fill the hole. For many countries, the gap is enormous—multiples of GDP—largely because their citizens are living longer and having fewer babies....

Private and public sectors are locked in a marriage, wherein the division of the family’s resources is always negotiable.
---------

Read the article in full at http://www.economist.com/realarticleid.cfm?redirect_id=16792828
« Last Edit: August 25, 2010, 16:20:47 GMT by Napodano »

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Austerity or stimulus?
« Reply #1 on: August 25, 2010, 19:16:57 GMT »
It looks like the Institute for Fiscal Studies (IFS) will not be supporting the austerity package as it stands in the UK on distributional grounds, but its methodology has been challenged by the Treasury on the basis that it does not factor in the stimulus from welfare reform.  So perhaps, an invisible vote against.
http://www.ifs.org.uk/bns/bn108.pdf
« Last Edit: August 26, 2010, 07:32:50 GMT by Napodano »

 

RSS | Mobile

© 2002-2024 Taperssection.com
Powered by SMF