Via Simon Wren-Lewis‘s blog. You see the flattish bit from 2002 to 2008? When people like Hopi Sen talk about “spending out of control”, that’s the bit they mean. This is some weird use of the word “control”, huh?
In fact, the only period on the chart where the budget wasn’t either busting or booming out of control was…the period of roughly stable close to full employment between 2002 and 2007-8. It’s like the man said: look after unemployment and the budget will look after itself.
Gavin Kelly is of course right. But I wonder if this is actually the mark of a deeper truth. If you want a tough fiscal rule, it might just be “full employment, dammit”.