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2011-12-30

Economic ideology and reality

Comments on TONY MAKIN “Fiscal stimulus, not Europe, to blame for economy”, 30/12/2011, http://www.theaustralian.com.au/national-affairs/opinion/fiscal-stimulus-not-europe-to-blame-for-economy/story-e6frgd0x-1226232857308
While it is ideally good that governments run balanced budgets, is there a point of process optimisation that may give rise to budget deficits and surplus in some years?
While monetary policy has been argued by many economists to be used as the macroeconomic policy tool to regulate the economy, haven't we already seen that monetary policy has its limitation as well, especially during the GFC 1, where interest rates were at or near 0 and economies were still struggling even with strong fiscal stimulus in the US and Europe?
Why do some economists only think along a particular line of thought with little regard to the reality and to whether it is working or not?
Besides, how can the traditional monetary policy along to deal with the two speed or patch work economy as Australia has witnessed with mining booms?

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