sectoral balances

Seven Unsustainable Processes – Original

18 April 2012

Of all the economists, Wynne Godley had the rarest of rare ability to model and imagine the economic dynamics of the whole world. “… a full macroeconomic model in his head, which, by some sort of subconscious process, he computed.” as his obituary from FT said. In the recent INET conference paper, Dirk Bezemer discusses Wynne […]


William Dudley On U.S. Sectoral Balances

29 February 2012

Discussions of the U.S. public debt and fiscal deficits curiously miss on the connection with the external sector. Even the Congressional Budget Office (CBO)’s The Budget And Economic Outlook report misses this connection when projecting the public debt over many scenarios. Last week the President of the Federal Reserve Bank of New York, William Dudley gave […]


The Un-Godley Private Sector Deficit

24 February 2012

Economists worry too much about the government’s deficit although they seem to not know about the private sector deficit. Goldman Sachs’ chief economist Jan Hatzius came to know about the sectoral balances approach and called the difference between United States’ private expenditure and income in “The Un-Godley Private Sector Deficit”. He later included the sectoral balances […]


Saving Net Of Investment [Updated]

21 February 2012

There is a tendency of some economic commentators going for the overkill to make inaccurate statements such as Without a government deficit, there would be no private saving. See here and here. (h/t Steve) But this is mixing up saving for saving net of investment. Now, “saving net of investment” is sometimes called “net private saving”, although the […]


Imbalances Looking For A Policy

14 February 2012

… and not Infernal Muddles Readers of this blog may be aware of my fanhood for Wynne Godley and the title of this post is from a paper by him from 2004, although it was US-centric. This post is on imbalances in the Euro Area. Wynne had not only always foreseen crises, but also knew […]


Some GIMP Fun With Spain’s Sectoral Balances

24 January 2012

… but not fun for the Spanish people. In yesterday’s post Spain’s Sectoral Balances, I briefly discussed the sectoral balances of Spain and its connection with demand, income and output. Here’s the original graph from the Banco de España again with my viewpoints in the previous post. I learned some GIMP from a friend some […]


Spain’s Sectoral Balances

23 January 2012

The Banco de España released its Quarterly Economic Bulletin today and it had an interesting chart on the sectoral balances of the Spanish economy. With a net indebtedness of €994.5bn – i.e., close to €1 trillion – as compared to the gross domestic product of €1.06tn (2010 figure) Spain has limited choices. Except via the possibility of expanding […]


S&P’s FAQs On EA Rating Actions

14 January 2012

S&P released another document yesterday in connection with the rating action of Eurozone governments yesterday which you can get via it’s Tweet: FAQ on factors behind S&P’s rating actions on Eurozone governments: — Standard & Poor’s (@standardpoors) January 13, 2012 On the political agreements, the release says: We also believe that the agreement is […]


More From Nicholas Kaldor

10 January 2012

In a recent post, I quoted Kaldor and got a lot of response on what I quoted. So a post on more from the book The Scourge Of Monetarism from the early 80s. In the following PSBR is Public Sector Borrowing Requirement – the term used often in the UK for net market borrowing of […]


Martin Wolf On EU Summit

14 December 2011

Excellent analysis of the EU Summit by Martin Wolf on FT using the sectoral balances approach: … Let me make this point by turning last week’s analysis of the balance of payments into one of foreign, private and government financial balances in eurozone members (see charts). To remind readers: these have to add up to […]