Criticising the Fiscal Stimulus

Last week the Governor of the Bank of England voiced his (legitimate) concerns over the scale of the fiscal stimulus being applied to the UK economy. In today’s papers Stephen King writing in the Independent hints that quantitative easing might undermine the financial markets ability to provide an early warning system of returning inflation.

“The enthusiasm for Keynesian fiscal expansion is waning in the light of horrendously large budget deficits, whether or not they are funded via central bank purchases of government bonds. It’s all very well having more or less every government in the world borrowing more, but where are the creditors?”

And Larry Elliot in the Guardian pours scorn on the idea that the extra government spending will do much to enhance the government’s green credentials.

Roger Bootle and his team at Capital Economics are predicting that UK government borrowing could total £1 trillion over the next five years taking net government debt to 100% of GDP. He explain why in this article in the Telegraph.

“The ultimate objection to fiscal stimulus packages is that they endanger the solvency of the state, thereby giving rise to fears of default. Indeed, if such a prospect is realistic then the stimulus package may not work. We are not yet at that point in the UK – but nor are we a million miles away from it.”

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Trucks are the new way of measuring debt [1 Feb 2012]
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Unit 2 Macro: Signs of Progress for Zimbabwe [29 Jan 2012]
Unit 4 Macro: Focus on India - Comparative Advantage [27 Jan 2012]
Unit 2 Macro: Focus on China - Trade and Growth [27 Jan 2012]
Unit 2 Macro: Focus on China - Inflation [26 Jan 2012]
Unit 2 Macro: Focus on China - Carbon Emissions and Growth [26 Jan 2012]
Unit 2 Macro: Focus on China - Per Capita Incomes [26 Jan 2012]
Unit 2 Macro: Focus on China - Changing Economic Structure [26 Jan 2012]
Unit 4 Macro: Focus on India - Economic Growth [24 Jan 2012]
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Inflation - what’s up, what’s down and what’s going to happen next [17 Jan 2012]
Unit 4 Macro: France loses her AAA credit rating [15 Jan 2012]
Unit 4 Macro: Economics of Fiscal Deficit Reduction [12 Jan 2012]
Unit 4 Macro: UK Bond Yields Reach Record Lows [11 Jan 2012]
Revision Presentation: Economics Evaluation Skills [10 Jan 2012]
Exam Advice: 10 Ideas for a Better Economics Paper [10 Jan 2012]
Unit 2 Macro: Factors Driving Business Investment [10 Jan 2012]
Unit 2 Macro: Quantitative Easing in the UK [8 Jan 2012]
Unit 4 Macro: Natural Disasters and their Economic Impact [7 Jan 2012]
AS and A2 Economics - 10 Ways to Improve Evaluation [4 Jan 2012]
Unit 1 Micro: Prezi on the Economics of Negative Externalities [2 Jan 2012]
Exam Technique for Economics - Weesteps to Evaluation [2 Jan 2012]
Resources on Keynes and Hayek [27 Dec 2011]
2011 in Review - The US Economy [27 Dec 2011]
Unit 2 Macro: The UK Housing Market in 2011 [26 Dec 2011]
Unit 2 Macro: Brazil Overtakes UK in Economic Size [26 Dec 2011]
The Eurozone Crisis Explained (again!) [22 Dec 2011]
Introduction to Neuroeconomics - Fusing Psychology with Economics [16 Dec 2011]
Rising prices and falling real incomes [13 Dec 2011]
Rory Sutherland at Zeitgeist [1 Dec 2011]
Behavioural Economics: Herd Behaviour [28 Nov 2011]
Where is the UK Economy? National Output [22 Nov 2011]
Stephen King - Great Article on Macroeconomics [22 Nov 2011]
Beyond the Bike - The Value of Money [19 Nov 2011]
LSE Lecture: Daniel Kahneman - Thinking Fast and Slow [15 Nov 2011]
Unit 2 Macro: Should the EU introduce a Tobin Tax? [14 Nov 2011]
LSE lecture: Darwin economy [13 Nov 2011]
AS Macro: The State of British Business [13 Nov 2011]
Eurozone crisis - a selection of resources [12 Nov 2011]
Economics Resources - Week Ended 6 November 2011 [6 Nov 2011]
Australia lowers interest rate to 4.5% [1 Nov 2011]
AS and A2 Macro: GDP resources from Planet Money [31 Oct 2011]
Is happiness the right measure of social progress? [20 Oct 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
Keynes Prize: The Economics of Cities (2) [13 Oct 2011]
Keynes Prize: The Economics of Cities (1) [12 Oct 2011]
Unit 4 Macro: Unit Labour Costs and Inflation [12 Oct 2011]
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Unit 2 Macro: UK suffers a weak recovery [12 Oct 2011]
Unit 4 Macro: UK Inflation Charts [12 Oct 2011]
Why Is Macroeconomics Such A Mess? [11 Oct 2011]
University Challenged [11 Oct 2011]
Fat tax: Denmark [5 Oct 2011]
Unit 2 Macro: Exercise on National income [27 Sep 2011]
Greek debt decision tree [25 Sep 2011]
Unit 4 Macro: Greek Economy at Default’s Door [25 Sep 2011]
Unit 4 Macro: IMF Flags up Risks of Double Dip [20 Sep 2011]
Inflation in India [18 Sep 2011]
Unit 2 Macro: Interest Rates and Income Inequality [16 Sep 2011]
Study Note - Macroeconomic policy objectives [16 Sep 2011]
Study Note - Measuring national income [16 Sep 2011]
Study Note - Value Added and Contributions to a Nation’s GDP [16 Sep 2011]
Study Note - Introduction to GDP [15 Sep 2011]
Unit 2 Macro: Economic Growth and Inequality [14 Sep 2011]
Study Note - What is Macroeconomics? [13 Sep 2011]
Unit 2 Macro: Human Development Index (HDI) [13 Sep 2011]
Unit 2 Macro: Value Added in Production and GDP [11 Sep 2011]
Starter Video: The Slums of Manilla [11 Sep 2011]
50% tax rates - Chuck it George [7 Sep 2011]
NHS spending good, private provision bad? [5 Sep 2011]
Mixing with the Nobel Economists [4 Sep 2011]
Toilet rolls, soap and climate change [1 Sep 2011]
John Kay on the future of Economics [26 Aug 2011]
Unit 4 Macro: GDP per person since the credit crunch [19 Aug 2011]
Unit 1 Micro: The Price of Football [2 Aug 2011]
Monetary Policy Roundtable [25 Jul 2011]
Unit 4 Macro: Dangers of High Inflation [11 Jul 2011]
7 Reasons why Teachers should Blog [7 Jul 2011]
AQA ECON4 Context [20 Jun 2011]
Shaping the Future - Blanchflower on the UK Economy [7 Jun 2011]
Poor Economics - Esther Duflo at the LSE [3 Jun 2011]
A2 Macro: Consumer Spending [30 May 2011]
Macro Revision: Putting Things in Context [25 May 2011]
AS Macro: Preparing for Unit 2 (May 2011) [25 May 2011]
AS Macro Key Term: Supply-Side Policies [25 May 2011]
AQA Macro: Remember to revise inflation [25 May 2011]
AS Macro Key Term: Demand Pull Inflation [24 May 2011]
AS Macro Key Term: Deflation [24 May 2011]
AS Macro Key Term: Cost Push Inflation [24 May 2011]
AS Macro Key Term: Inflation [24 May 2011]
AS Macro Key Term: Trend Growth [23 May 2011]
AS Macro Key Term: Recession [23 May 2011]
AQA A2 Economics - European Context [23 May 2011]
AS Macro Key Term: The Output Gap [23 May 2011]
Revision notes on unemployment [22 May 2011]
AS Macro: GDP Projections [19 May 2011]
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