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First, they would be allowed to run a temporary deficit.
But on Tuesday Abbott refused to rule out a "temporary deficit reduction levy".
And whatever room for maneuver they might have had was taken away by Europe's Economic Stability and Growth Pact, which prevents even temporary deficit spending.
Of particular interest to this discussion is the Fund's system of Drawing Rights, which permits countries in temporary deficit to draw supplies of foreign currency according to predetermined quotas.
Thus, the interest-rate differential will cause a net movement of short-term funds in the direction required to offset the temporary deficit or, in the opposite case, to reduce a temporary surplus that is embarrassing to others.
Following a warning by S&P on Thursday that the chances of a credit downgrade had increased post-election, Xenophon said on Friday the government should keep the 2% temporary deficit levy in place until the deficit was under control.
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But even if they weren't, running temporary deficits would be difficult.
But standard textbook economics says that it's O.K., in fact appropriate, to run temporary deficits in the face of a depressed economy.
These are intended only to offset private international flows of capital on precautionary or speculative account, not to finance even temporary deficits in countries' balance of payments.
But those who said the stimulus was too small argued that temporary deficits weren't a problem as long as the economy remained depressed; we were awash in savings with nowhere to go.
More important, in the 1980s, anti-tax dogma hadn't taken effect to the same extent it has today, so state and local governments were much more willing than they are now to cover temporary deficits with temporary tax increases, thereby avoiding sharp spending cuts.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com