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St Catharine's Political Economy Seminar Series - Speakers: Graham Gudgin and Ken Coutts

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Talk Title: ‘Why fiscal targets for the UK economy are a bad idea’

The next St Catharine’s Political Economy Seminar in the series on the Economics of Austerity, will be held on 16 November 2016 – Graham Gudgin and Ken Coutts will give a talk on ‘Why fiscal targets for the UK economy are a bad idea’. The seminar will be held in the Ramsden Room at St Catharine’s College from 6.00-7.30 pm. All are welcome. The seminar series is supported by the Cambridge Journal of Economics and the Economics and Policy Group at the Cambridge Judge Business School.

Speakers: Graham Gudgin is currently Honorary Research Associate at the Centre For Business Research (CBR) in the Judge Business School at the University of Cambridge. He was director of the Northern Ireland Economic Research Centre from 1985 to 1998 when he became Special Adviser to the First Minister in the NI Assembly until 2002. Prior to this he was a member of the Cambridge Economic Policy Group (CEPG) under the late Wynne Godley. He is the author of a large number of books, reports and journal articles on regional economic growth in the UK and on the growth of small firms. Current research interests at the CBR are in UK macro-economic policy. Together with Ken Coutts at Cambridge and colleagues at the Ulster University an econometric model of the UK economy has been constructed to undertake policy simulations for the UK economy. The first forecast report (winter 2015) and a description of the model can be found on the CBR website.

Ken Coutts is currently Honorary Research Associate at the Centre For Business Research (CBR) in the Judge Business School at the University of Cambridge and Life Fellow in Economics, Selwyn College, Cambridge. He was formerly Director of Studies in the Faculty of Economics, University of Cambridge. A member of the Cambridge Economic Policy Group in his younger career, led by Wynne Godley, his main interests are in macroeconomics, monetary and fiscal policy, trade, capital flows and balance of payments. He has published widely in these areas. He has also written extensively on the pricing behaviour of manufacturing industries in the UK and Australia. He is currently working on macro-economic policy issues in the UK.

Talk Overview: Graham Gudgin and Ken Coutts will talk on ‘Why fiscal targets for the UK economy are a bad idea’. Two of the Chancellor of the Exchequer’s administrative innovations have been firstly the use of targets for the fiscal deficit and the public sector debt to GDP ratio, and secondly an independent Office for Budget Responsibility (OBR). The fiscal targets were comprehensively missed by the 2010-15 Administration, but undaunted the Chancellor set new targets for 2015-20. We believe that these latest targets will also be missed because the UK economy will grow more slowly than the OBR believes. The OBR is at the centre of the Government’s targeting and is lavishly cited in the Chancellor’s Budget and Autumn Statement speeches. However the OBR ’s forecasts for GDP and hence tax revenues and much else, are really arbitrary assumptions and, in our view, should not be used to guide policy. The wider long-term target of a balanced budget makes little economic sense, is probably unattainable and should be dropped. The seminar will discuss the implications of reflation policies with no fiscal targets. Please contact the seminar organisers Philip Arestis (pa267@cam.ac.uk) and Michael Kitson (mk24@cam.ac.uk) in the event of a query.

This talk is part of the St Catharine's Political Economy Seminar Series series.

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