Dear Peter
The strange thing is that there is general concern when 'demand is too
high' but not when the source is exports and rarely when the source is
investment. Of course, if one is concerned purely with overheating the
goods market (and by implication the labour markets that service them),
then there is no reason to distinguish between exports, investment or
domestic consumption. The heart of the fear of 'too much demand' is, I
believe, the puritanical notion that immediate gratification is bad and
that 'saving' by spending on investment goods or earning foreign exchange
is OK.
kind regards
Beth
At 04:07 PM 3/02/2003 +1100, Peter Kriesler wrote:
>In response to both Beth and Bill, I think that there is a role for
>government borrowing, that is when there is some concern over the
> level of aggregate demand being too high. In other words, when the economy
>is near full employment, or when demand inflation of the balance of trade
>deficit
>are concerns, then governments may borrow to reduce demand pressures. Of
>course, taxes on high incomes or elsewhere can probably do the same thing
>more efficiently, but that may be harder to sell politicly!
>
>
>
>Peter Kriesler
>School of Economics
>UNSW
>Sydney 2052
>http://economics.web.unsw.edu.au/people/pkriesler/
>
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Received on Mon Feb 3 06:04:42 2003
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