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    In order to minimise this risk and support a sustainable recovery, the next government should set out a detailed plan to reduce the structural budget deficit more quickly than set out in the 2009 pre-budget report.

    The exact timing of measures should be sensitive to developments in the economy, particularly the fragility of the recovery. However, in order to be credible, the government’s goal should be to eliminate the structural current budget deficit over the course of a parliament, and there is a compelling case, all else being equal, for the first measures beginning to take effect in the 2010-11 fiscal year.

    The bulk of this fiscal consolidation should be borne by reductions in government spending, but that process should be mindful of its impact on society’s more vulnerable groups. Tax increases should be broad-based and minimise damaging increases in marginal tax rates on employment and investment. [...]

    Tim Besley, Sir Howard Davies, Charles Goodhart, Albert Marcet, Christopher Pissarides and Danny Quah, London School of Economics;
    Meghnad Desai and Andrew Turnbull, House of Lords;
    Orazio Attanasio and Costas Meghir, University College London;
    Sir John Vickers, Oxford University;
    John Muellbauer, Nuffield College, Oxford;
    David Newbery and Hashem Pesaran, Cambridge University;
    Ken Rogoff, Harvard University;
    Thomas Sargent, New York University;
    Anne Sibert, Birkbeck College, University of London;
    Michael Wickens, University of York and Cardiff Business School;
    Roger Bootle, Capital Economics;
    Bridget Rosewell, GLA and Volterra Consulting
    http://www.timesonline.co.uk/tol/com...cle7026234.ece

    Signatories to the letter include "several former members of the Bank of England’s monetary policy committee; a former deputy governor of the Bank and head of the Financial Services Authority; a former chief economist of the IMF and a Labour peer".

    Eliminating the structural deficit over the course of one Parliament is certainly much faster than proposed by Labour. It's the right move, though; any potential damage to growth (which I don't think would occur) could be mitigated through more aggressive monetary policy.
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    (Original post by inyourhouse)
    http://www.timesonline.co.uk/tol/com...cle7026234.ece

    Signatories to the letter include "several former members of the Bank of England’s monetary policy committee; a former deputy governor of the Bank and head of the Financial Services Authority; a former chief economist of the IMF and a Labour peer".

    Eliminating the structural deficit over the course of one Parliament is certainly much faster than proposed by Labour. It's the right move, though; any potential damage to growth (which I don't think would occur) could be mitigated through more aggressive monetary policy.
    Whats the difference between the structural deficit and the non structural deficit?
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    (Original post by Quady)
    Whats the difference between the structural deficit and the non structural deficit?
    The structural deficit is the part of the deficit that cannot be accounted for by the business cycle. In other words, it's the part that would exist even without tax revenues falling and automatic stabilizers and fiscal stimulus increasing. We know it exists because the government had been running deficits for years before the recession.
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    Are economists abysmal scientists?
 
 
 
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