A Strategy for Stable Prices

Macro‐economic Aspects of the 1988 Budget

“…It was first stressed by commentators outside Whitehall, particularly Tim Congdon, who drew attention to the risks of fiscal instability if the debtlincome ratio started to rise. An early, and deliberately simple, approach to the problem was adopted by Budd and Dicks (1983) who proposed that the PSBR should be reduced to 1 per cent of GDP in order to combine a stable debthncome ratio with zero inflation. That rule was subsequently adopted by the Treasury in its study of long-term public expenditure trends (HM Treasury (1984)).…”

Did Britain have a ‘Keynesian Revolution’?

“…35 A PSBR/GDP ratio of 1 per cent had earlier been judged compatible with long-run price stability in a paper published in the London Business School's Economic Outlook in 1983. 36 The 1984 Green Paper was a theoretical document. The out-turns in practice were very different.…”