Opening Quotes

Martin Wolf (FT) – “quotes”: ‘The pain in Spain will test the Euro’

“This treaty raises deep legal, political and economic questions.

“It does make economic sense to target cyclically adjusted rather than actual deficits. But the improvement in economics is at the cost of a reduction in precision. Nobody knows what a structural deficit is.”

AUTHORS EXAMPLE: In October 2007 (=’real-time’) the IMF considered Ireland to be in ‘structural balance’ …. In October 2011 (=’retrospectively’) it revised this assessment to a ‘structural deficit’ of <8.4%>

“Consider the political and legal implications. Would elected governments accept the guesstimates of unaccountable technocrats? How, moreover, are judges to reach a decision? Are they to evaluate the merits of alternative econometric models? Since huge changes in estimates of structural deficits are likely, how is a government to adapt? Putting an unmeasurable concept into the law seems mad.”
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