- Home
- Publications
- The Macroeconomic Record Of The Coalition Government
The macroeconomic record of the coalition government
External Authors
Wren-Lewis, Simon
Related Themes
Macro-Economic Dynamics and PolicyJournal
National Institute Economic Review, No. 231
Publisher
Sage Publications, London
External Resources
This paper examines the outcomes for changes introduced by the UK Coalition government in 2010. The Office for Budget Responsibility (OBR) is generally regarded as a success, and should become a permanent part of fiscal policymaking. The form of the primary fiscal mandate, involving a five-year rolling target, appears to be a sensible way to shape fiscal decisions when monetary policy is able to stabilise the economy. Unfortunately it was introduced, along with a five-year programme of severe fiscal consolidation (austerity), while the economy was in a liquidity trap. The OBR estimates austerity reduced GDP growth by 1 per cent in both 2010–11 and 2011–12, and monetary policy was unable to offset this. For the Liberal Democrats a misreading of the Eurozone crisis may have been responsible for this mistake, but for the Conservatives this mistake appears to derive from an unconventional view that the liquidity trap is unimportant.
Related Blog Posts
Public Debt Sustainability and Fiscal Rules
Stephen Millard
Benjamin Caswell
05 Feb 2024
4 min read
Related Projects
Related News
Call for Papers: Lessons From Quantitative Easing & Quantitative Tightening
09 Feb 2024
1 min read
Related Publications
Adam Smith and the Bankers: Retrospect and Prospect
04 Jan 2024
National Institute Economic Review
On the Promises and Perils of Smithian Growth: From the Pin Factory to AI
04 Jan 2024
National Institute Economic Review
Economic Progress and Adam Smith’s Dilemma
04 Jan 2024
National Institute Economic Review
Adam Smith’s ‘Wealth of Nations’ is Still Relevant to UK Trade Policymaking on International Trade
04 Jan 2024
National Institute Economic Review