tag:blogger.com,1999:blog-3448927642739850334.post478997455575738580..comments2023-10-29T08:06:00.610+00:00Comments on The Political Economist: Graph(s) of the week: Budget numbersVuk Vukovichttp://www.blogger.com/profile/01878567452492217960noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-3448927642739850334.post-11181477259225376282012-03-28T22:12:12.535+01:002012-03-28T22:12:12.535+01:00Not necessarily, even though such a scenario isn&#...Not necessarily, even though such a scenario isn't excluded. <br /><br />If you'd look at the US trend line after the Great Depression (see first graph <a href="http://economistsview.typepad.com/economistsview/2012/03/permanent-or-temporary.html" rel="nofollow">here</a>) the average pre-Depression trend line was overshoot during WWII. In the same <a href="http://economistsview.typepad.com/economistsview/2012/03/permanent-or-temporary.html" rel="nofollow">link</a> you can observe other countries and their shocks of which some were temporary (Sweden, Argentina, Columbia, Philipines) while others were permanent (Spain, Japan, Thailand, Malaysia). In that post Mark Thoma makes a good comparison of the 90s crises in Sweden and Korea where it seemed that both are on for a permanent shock and a lower long run trend line (see <a href="http://economistsview.typepad.com/.a/6a00d83451b33869e201676423f995970b-popup" rel="nofollow">here</a>), but eventually Sweden experienced a <a href="http://economistsview.typepad.com/.a/6a00d83451b33869e20168e924bf46970c-popup" rel="nofollow">bounce back</a> while Korea is still in on a decreasing trend. <br /><br />That's why it's hard to tell from today's perspective what is more likely to happen for the UK. Even after two years, if this continues it will still be uncertain which of the two scenarios will be applicable. Shocks in economics are always unpredictable, that's why forecasters and empiricists hate them.Vuk Vukovichttps://www.blogger.com/profile/01878567452492217960noreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-64406203076911754482012-03-28T13:31:57.966+01:002012-03-28T13:31:57.966+01:00Does the output gap mean that the trend-line for t...Does the output gap mean that the trend-line for the UK be lower from now on? Does this mean that the UK is likely to expect lower long term growth in the future (e.g. 2% instead of an average 3%)?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-18667963727548687042012-03-25T20:49:33.819+01:002012-03-25T20:49:33.819+01:00oh I believe the society can get pretty hung up on...oh I believe the society can get pretty hung up on discredited ideas..this is not the first case nor will it be the last one.<br />Perhaps you meant in the field of economics - that might be the case, yes.Vuk Vukovichttps://www.blogger.com/profile/01878567452492217960noreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-22241409195282655312012-03-25T20:47:36.570+01:002012-03-25T20:47:36.570+01:00Corrected, thanks!Corrected, thanks!Vuk Vukovichttps://www.blogger.com/profile/01878567452492217960noreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-74253515665574426592012-03-25T20:05:02.175+01:002012-03-25T20:05:02.175+01:00I think you made a mistake there: "Even thoug...I think you made a mistake there: "Even though corporate and personal income taxes did rise" - I assume you meant fall. <br /><br />Anyway, I agree, the Budget is still Keynesian and I was mostly disappointed by it. There is too much politics in the whole thing, and this is the biggest reason behind a sluggish recovery. No one has the guts to pull off coherent and hard measures to pull us out.<br />As long as this is the case, the output gap will continue to be negative and the trend will eventually adjust downwards...Charlienoreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-36604888696502894022012-03-25T14:23:13.256+01:002012-03-25T14:23:13.256+01:00This comment has been removed by the author.kyle8https://www.blogger.com/profile/13299846346032212714noreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-35701105710212754542012-03-25T14:22:09.778+01:002012-03-25T14:22:09.778+01:00UK can expect only the slowest and weakest of reco...UK can expect only the slowest and weakest of recoveries as long as the Keynesian model is followed. <br /><br />Never before have people clung so tenaciously to such a discredited idea.kyle8https://www.blogger.com/profile/13299846346032212714noreply@blogger.com