Re: Sven's comments on state surpluses

[Christopher Niggle <niggle@xxxxxxxxxxxxxx>]

Sven:

I agree with you on the probability of budget balancing constraining the
provision of essential public goods and services, and am not an advocate
of balancing state budgets or running surpluses (unless the
macro-situation warrants doing so, as in an inflationary period at high
employment).  I was speaking to the probable macroeffects of balanced
budgets.  Ceteris paribus, a balanced budget doesn't necessarily lead to
low or declining levels of Aggregate Demand - if the balanced budget is at
a high level.  Again, as in the balanced budget multiplier hypothesis.

And the Clinton era surpluses have been quite small, have only occurred
for two years, and have been offset up to now by large private sector
deficits which have propped up Aggregate Demand enough to keep the economy
at high employment (as Godley and Wray have been arguing, correctly I
think).

Chris