They had mentioned it previously, and when tax revenues were down they did say they were looking at moderating spending. To be fair, compared to the US government, NZ has been willing to say that it will target a medium term balanced budget – that is why National keeps on going on about the target of getting back in surplus in 5 years.

Now 5 years may look like a long time, but when you see their forecasts it seems that we don’t really get back to potential for some time. Now I’ve noticed that the Reserve Bank has the output gap closing in two years – I would suggest that the structural deficit might be a bit more problematic if that is the case …

We all have different priors, what can I say. I am sure I come off as overly dogmatic in defense of inflation targeting.

His comment in this case is definitely justifiable – however, I feel it required more context. I see economists of ALL stripes railing against deficits or for them, without splitting the conversation into “structural” and “cyclical” elements. It is an important, nah essential, thing to do when looking at spending in a “macro” sense.

He’s reliable for Radio NZ though. Whenever they want somebody to argue against cuts in spending or against inflation targeting, just call up ol’ reliable Ganesh.