FISCAL POLICY AND MACROECONOMIC MODELLING

Abstract

With public debt outcomes still on a wrong trajectory, the case is made that the importance of demand is underestimated in the United Kingdom and OECD countries. Poor productivity outcomes are explained on a demand view, and the OBR writing off outcomes on the supply side is shown as contentious. Likely needed expenditure (including current) is wrongly ruled out. Change should strengthen rather than undermine the public finances. The sum of the parts is an appeal for an independent review of modelling processes, with the 1929–1931 Macmillan Inquiry a useful precedent.