tag:blogger.com,1999:blog-9172766774137902766.post8712592988478401150..comments2023-12-23T09:28:20.869+00:00Comments on The View from Cullingworth: Krugman...Or When You Get Stuck Change the SubjectUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-9172766774137902766.post-4406729249636342402012-05-31T15:33:22.639+01:002012-05-31T15:33:22.639+01:00He's just a shill for punk-keyensian head-bang...He's just a shill for punk-keyensian head-bangery. His Nobel isn't for macro.<br /><br />Yup. Good post.Jackarthttps://www.blogger.com/profile/04477130724830922566noreply@blogger.comtag:blogger.com,1999:blog-9172766774137902766.post-68283945527704856442012-05-31T15:09:26.728+01:002012-05-31T15:09:26.728+01:00SImon, there is no general argument either for or ...SImon, there is no general argument either for or against austerity as such. It entirely depends on your view of the economy. <br /><br />Krugman's view is that in a depressed economy austerity makes matters worse, and if you take Greece as an example it is evident that this is correct - austerity is indeed driving the economy deeper into recession. But the UK is not Greece, and Krugman's argument for fiscal stimulus to me looks quite thin in the present economic circumstances.<br /><br />Leadsom's argument in essence is that the UK is not so deeply recessed that austerity would have this effect, and that supply-side reform is necessary. She has a point, but I personally think she went too far with the crowding-out argument. There is not much evidence that the private sector at the moment is able or willing to expand into the gap that would be left by the sort of public sector cuts she wants to see. Once the private sector is evidently expanding, public sector cuts may well be appropriate to allow it space. At the moment I'm not convinced - not least because we have the Eurodisaster on our doorstep and if that blows up all bets are off. It seems to me that making radical changes to the balance between private and public sector when there is a potential catastrophe on the horizon isn't all that bright an idea.Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.com