Tuesday, November 25, 2008

Cyclical vs structural deficits

I thought that the reported comments from Opposition leader Turnbull opposing an Australian budget deficit under any circumstance were remarkably silly. Yesterday I tried to disentangle some of the general issues here in Government budget deficits - cyclical versus structural: lessons from the 1970s.

One of the consistent points that I have tried to make in discussing Government responses to current economic problems can be simply summarised as less haste, more speed. I have also been concerned about the risk of mortgaging the future through hasty responses, something the British Government appears to be doing in its latest budget review. There was, although this is a topic for another post, something very old-fashioned about the British response.

At a time of crisis it can be remarkably difficult to maintain a longer term focus. Yet to my mind this is what we need to do.


Unknown said...

The Paper is one of the first attempts to compute cyclical and structural deficits for a set of countries candidate to accession to the EU. Three main results are derived: first, the high deficits observed in candidate countries in recent years have a structural nature.
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Jim Belshaw said...

Hi Adolpho. I think that part of your comment got lost.