Friday, August 13, 2010

Two really good metaphors on the fiscal rule mess-up

I was meaning to relay these two metaphors, both of which are more than a couple of weeks old, before; it just got delayed during my long absence.

First, Tanju Gorgulu, whose book I had reviewed some time ago (although it was under a nom de guerre), likens the fiscal rule formula to the end-year bonus formulas he used to design during his previous life as a finance executive- these were supposed to be designed not to look too dangerous or complicated. As Gorgulu notes, the formulas never substituted for old-school bargaining.

Then, Hasan Ersel likens the attempts to postpone the fiscal rule to a someone canceling catastrophe insurance as the storm appears on the horizon, obviously alluding to the fiscal woes around the globe- I could not find the article, but it should be from mid to late-July.

Both authors wrote well in advance of the government's latest fiscal rule theatrics, so they should be commended for their premonition, but your friendly neighborhood economist did not fare that badly, either.

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