|Peter Boettke|
While we have been hit hard by winter here in Virginia, things have heated up in the UK with the debate among economists on the fiscal state of affairs. A group of leading British economists, Tim Besley, Charles Goodhart among them, published a letter in the Sunday Times of London arguing that the government had to get control of the fiscal situation or UK economic policy will loose all credibility and the economy would suffer instability and the economy recovery would be thwarted. The fiscal framework must be credibly salvaged for the UK economy to recover, and the only way to do that is to get spending once again under control.
Of course, as soon as these words were uttered Keynesian economists from the UK and US stepped in to urge the UK government to stay the course of deficit spending as the only policy path to economic recovery. The debate mimics earlier debates in 20th century economic history, and should in my opinion also lead to a serious debate concerning US policy among the leading economic thinkers.
Matthew Lynn provides commentary and also links to the discussion.
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