Nicholas Gruen writes a thoughtful post on something I discussed here a while ago:
"On the bright side the British Conservatives have made the right move with their Office of Budget Responsibility, though it’s unclear how much it will be able to take a position on the appropriateness of fiscal policy – as opposed to scrutinising forecasts. Anyway, the case to move fiscal policy further towards the model we have now arrived at for monetary policy seems overwhelming.
So far lots of countries have toyed with fiscal transparency bodies, but, as I’ve argued previously, it’s not an absence of basic fiscal transparency that allowed Reagan or Bush II to be as irresponsible as they were. So at a minimum if we’re to get anywhere, we need some independent but official source of public advice to the government – and some similarly official, public and independent comment on how well it’s going. Ideally we’d develop out of this some backstop way in which taxes could be changed across the board to deliver appropriate fiscal policy, with the government always free to deliver the requisite policy in some other way. Then again it took many decades to deliver some semblance of independence to monetary policy, so I guess we’re not making such bad progress..."
