In practical terms that is true – and that is why economists expected interest rates to be so high. If the government was going to be irresponsible and blow its budget interest rates need to be high to get the rest of us to save.

Then the crisis happened 😛

Personally I think the OECD mistake came from excluding the other tax cuts – not including ours. I don’t see the point at looking at “stimulus ex stimulus we don’t like ” 🙂

To be clear, I do see your point though – I’m just unimpressed with the OECD for the exclusion

Dunno, I’m no weird-thinking economist ( 😛 ) but I don’t feel that our tax cuts (or resulting overall fiscal position) can be currently be considered a direct response to the crisis like the OECD has painted it.

An accidential stimulus is still a stimulus 🙂

More seriously though, if the government realised that the economy was smaller but knew that unemployment wasn’t going to rise, they would have had to make a choice between cutting spending or their tax cuts – and they would have done a bit of both.

However, given events they kept a lot of the spending – that in itself could be called “a stimulus”. It is a weird way of thinking about it – but it is definitely how economists will be looking at it.

But …

you could say that not cutting spending when the government realised that the books didn’t balance was a response to the crisis.

Now if this is the justification for including our cuts as stimulus I think the OECD should have included the tax cuts for those other countries as well! However, it is possible to frame it this way.

In this case the tax cut is “structural” but not cutting spending (which is the flip side) is a temporary stimulus in the face of a crisis 🙂

I agree that National wants a structural decrease in taxes. However there is another way to look at it:

National cut taxes and didn’t cut spending – that non-cut in spending could then be viewed as a “stimulus”, as over the medium term they will have to have a lower path for spending in order to sustain lower taxes.