🚨 NEW: Energy Secretary Miatta Fahnbulleh is reportedly set to reject Rosebank for oil drilling in the North Sea She believes it would do less for UK energy security than Jackdaw as most of its oil would be exported

Sovereign wealth fund respecters when you suggest that perhaps some of the NI contributions of British workers could have been invested in the stock market over the last 30 years.

‘We'd have a British sovereign wealth fund now that will be worth probably a trillion pounds’ Chancellor @JohnHealey_MP suggests what Britain could have gained if it had set up an energy wealth fund like Norway’s back in the 1980s #Peston

The U.S., France, and Spain will soon hold elections, and much of the debate is about how large government should be. Almost every fiscal multiplier cited in those debates answers a question the debates are not asking. Why? Because the impact multiplier of a temporary increase in government spending, the number nearly always cited, and the long-run multiplier of a permanent increase in government spending, the relevant number for this discussion, are two very different objects. The first measures how much output changes in the very short run when government spending goes up for some time. The second measures how much output changes in the very long run when government spending goes up permanently. The distinction should be obvious. Unfortunately, the distinction is not obvious, even to many economists. Why are the two multipliers so different? First, taxes. Temporary and permanent increases in government spending have very different tax implications. Second, slack. In the short run, output can rise because there are idle workers and machines, and because the central bank may not react. In the long run, output depends on the total levels of labor, capital, and technology, and government spending can affect all three. Third, what the government buys. Building a new highway today (a temporary increase) has very different implications than lowering Social Security retirement age (a permanent increase). Fourth, evidence. Nearly all our estimates come from episodes that were temporary by design: wars, stimulus packages, or federal money flowing to one state while the rest of the country pays the bill. Those episodes tell us little about a permanent, national, tax-financed program. People can reasonably disagree about the right level of government spending. The question has a positive side (what are the short- and long-run consequences of spending more or less?) and a normative side (should the government provide transfer x?). I might have some answers on the positive side. You do not need to share my normative views. But if you want to argue for a permanent increase in government spending and its consequences ten years from now, please do not cite models or evidence about the short-run effects of a temporary increase. Those models and that evidence answer a different question.