tag:blogger.com,1999:blog-2277215496195926573.post5222737176538194662..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: Robert Skidelsky: arbitrary deficit reduction targets are a farce.Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2277215496195926573.post-7116879415265907802014-12-08T03:20:11.591-08:002014-12-08T03:20:11.591-08:00OK thanks, I understand. Personally I have issues ...OK thanks, I understand. Personally I have issues with the details of "maximises employment without exacerbating inflation" in terms of politics/currency/trade/movement of people but I need to distill my own thinking on these issue some more. <br />The clarification was very helpful. Thanks.POKhttps://www.blogger.com/profile/16111950298664203217noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-15051952371319047002014-12-08T03:06:58.666-08:002014-12-08T03:06:58.666-08:00Yes, clearly the amount of deficit / surplus neede...Yes, clearly the amount of deficit / surplus needed is dependent on many things, the most important being whether the private sector is running a surplus or deficit. I.e. if the private sector runs a surplus (i.e. saves) that depresses demand so government just has to run a deficit to compensate. And that’s no more than a re-statement of Keynes’s “paradox of thrift” – i.e. the ironic fact that thrift has a harmful effect (absent countervailing measure by government).<br /><br />What I meant when I said that the deficit needs to be “whatever gives us full employment” was “in any given set of circumstances, the deficit / surplus needs to be whatever maximises employment without exacerbating inflation”. Perhaps I should have made that clearer. I.e. “circumstances” can vary substantially from one year to the next, e.g. private sector exuberance or lack of can vary substantially.<br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-66292033381632389682014-12-08T02:39:47.332-08:002014-12-08T02:39:47.332-08:00Hi Ralph,
It seems to me there are many deficit ...Hi Ralph,<br /><br /> It seems to me there are many deficit levels that would lead to full employment, for example, the government could employ everyone at average wage, initially this would lead to a very large deficit but if they are productive employed this would resolve over time - A big if. Alternatively given a productive and well run private sector it could run no deficit and still have full employment. Alternatively it could have a private sector driven by asset bubbles and have alternatively large and small deficits. Basically there is a lot that can happen below the accounting level. POKhttps://www.blogger.com/profile/16111950298664203217noreply@blogger.com