The Output Gap farce is back. We need to change economists, not economics
Nothing, in Brussels they can't. Living in the perfection of their own rich bubble, with stratospheric wages secured, the economists of the Commission cannot refrain from preaching a policy of austerity on others.
The main tool of economic repression is the measurement of the output gap, strongly condemned by many independent economists such as Robin Brook and Philipp Heimberger. The Output Gap is that measure which, if cleared or positive, indicates the danger of an inflationary development. Practically when the Output Gap reaches zero the economy, according to these technicians, is at “Full capacity”, so we need to start taxing more to cool it down. Too bad that this measure is perfectly theoretical, based on at least questionable calculations, which in the end indicates what economists, or their principals, want, not a real situation.
Heimberger , in a graph produced by him, shows this very clearly, using the forecasts on this value issued by the Commission:
Therefore, according to the commission, in a perfectly consistent way with the will to return to budgetary constraints from 2023 and also to approve the ESM, the Italian GAP output will practically zero in 2022 and even become positive in 2023. So precisely from that year we should begin, as expected, the economic repression of austerity.
So with an unemployment rate between 9% and 10%, 2.1 million young NEETs, non-students and non-workers, 29.4% youth unemployment at 29.4% we are a country with "Full employment" , indeed with too much occupation.
You understand now why any change in Italy, in our economic policy, cannot be separated from a radical change of paradigm, or of technicians, both in Brussels and in Rome
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The article The farce of the Output Gap is back. We need to change economists, not economics comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/torna-la-farsa-delloutput-gap-bisogna-cambiare-economisti-non-economia/ on Sat, 13 Nov 2021 11:00:50 +0000.