...against fictions and other tall tales

Wednesday 7 December 2011

Functional finance, public capital budgeting and the productivity-enhancing role of public investment

I really enjoy the interviews that the folks at the Institute for New Economic Thinking (INET) have been producing recently. They provide a quick and easy way of learning about new and different approaches to economics.

One interview that I think is particularly interesting from a policy standpoint is the one with economist Mario Seccareccia of the University of Ottawa. The topics discussed during the interview include the pre- and post-crisis approaches to fiscal and monetary policy, functional finance, the financial flows view of macromanagement, public capital budgeting and the productivity-enhancing role of public investment.

Needless to say, I believe the issues discussed in this interview are of fundamental importance to the modern practice of economic policymaking. The part of the interview that I found most interesting is when M. Seccareccia explains the importance of public investment, and the critical role it plays on enhancing productivity.

For those who are interested in knowing more about public capital budgeting, I recommend this excellent short paper by the late economist Richard Musgrave, a pillar in the area of public finance. R. Musgrave's ideas are discussed during the interview.

Reference:

Musgrave, R., "Budget Balance and Sound Finance"

3 comments:

  1. nice snippet on Seccareccia. i took pleasure in his h/t to Musgrave and acknowledgement of Eisner.

    looks like the eu is skidding into the trenches. hope that geithner and his cohorts remind the dappled bunch (eu) that they best get reasonable. on the other hand, bernanke best remind the markets that they are only markets, and should act as such. markets can't hold a sword over a sovereign's head and penalize a citizenry.

    long year-end ahead

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  2. I'm glad you appreciated the video. Personally, I think it makes for a good tutorial. Lots of great insight and, as you mentioned, good references.

    You and I both on Eisner. A great economist, I say. I repeat it every chance I get. I can only imagine what he and Musgrave would be thinking right now about austerity and 'conditional bailouts'. Ever hear the one about Eisner and President Clinton. RE told him during a meeting that his stance social security, etc was wrong. I suppose the fact that BC had been RE's student made it possible for him to be so straightforward.

    The EU's about derail. Whatever they decide to do, short of an equitable fiscal union won't work IMO. Even if they are able to salvage the EU's finances' through these shenanigans and budget capping measures, nationalism and its corollary, resentment, will show its ugly head to undo the rest of it.

    It'll be a long year indeed. A hard one, to boot, for many.

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