The thesis is reasonable and well-known: greater growth, lower deficit. But what happened in 2015 seems to corroborate another idea: a larger deficit (-5%) fuels the biggest growth in Europe (3.2%). So the government unilaterally raises the 2016 deficit target from 2.8% to 3.6%, while Brussels is going for 3.9%.
If it is true that we are in a “Secular Stagnation,” we may need alternative (Keynesian) policies.
WASHINGTON | By Pablo Pardo | The Monty Python are back in London, and one of their most famous sketches revolves around the phrase “nobody expects the Spanish Inquisition.” The Bank of International Settlements (BIS) is like the Spanish Inquisition, only less funny and more predictable than the British surreal comedy group: it is the bearer of orthodoxy, even if it means sending everybody to the stake. Its prescriptions are suicidal in economic terms, wrong from a moral point of view, and unjust from a societal perspective.