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What Economists Believe

People, especially journalists, have some ideas about what economists believe. Normally, economists largely don’t believe those things. I’ll do my best to summarise where the beliefs, and the beliefs about the beliefs differ!

Government Debt

Public thinks: Economists think that excess government debt is bad for growth
Economists think: Government debt is ‘excessive’ only when a country’s debt dynamics are durably bad. Excessive debt is a bad thing, but excessive does not mean ‘large’ in £ or $ terms, but rather as a function of the projected path of the debt/GDP ratio. Whether debt is excessive therefore depends on inflation, growth, the budget deficit and prevailing interest rates.

Inflation

Public thinks: Economists really hate inflation
Economists think: The worst thing is hyperinflation (a total breakdown in the value of money, which is the same as a breakdown of trust in society), the second worst thing is moderate deflation, and the third worst thing is moderate inflation. The best thing is a tiny bit of inflation.

Europe

Public thinks: Economists think that Britain should remain in the EU due to the benefits of free trade
Economists think: Britain should probably remain in the EU, but mainly because uncertainty around leaving is bad for confidence.

This is a work in progress, and ‘economists’ views on these topics do not represent my own. Suggestions and additions welcome!

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