Aggregate supply can shift outwards (as per economic growth vis a vis the accumulation of capital), or, AS IT ALWAYS TEMPORARILY DOES WITH FISCAL STIMULUS ANYWAY [as the new capital requires more labour to service and install it, expanding labour supply and thus AS].

Of course you’re still holding that denying monetary processes are “mainstream”. Which ignores that an increase in AD increases the demand for holdings of money.

You can cut me a cheque for educational/consulting services.

It is pretty easy.

The economy is at peak capacity and you increase the structural deficit even more. you cannot boost production so you boost inflation.
It is mainstream. It is what the RBA looks for, what TReasury does what the OECD and IMF talk about.

Statman is still crying about his absurd spending is out of control.

Oh yes if it lower now than last year it will have a negative effect on the economy.

See Japan and Posen chapter 2

Jason, can’t you see that we need more stimulus because now it is contractionary and that means a higher structural deficit, and therefore more inflation as AD contracts and expands outwards?

No? Neither can I!

“the National accounts would suggest the economy is not recovering that quick as yet”

“Glen Stevens, Ken Henry , OECD, IMF and myself are all mainstream”

http://www.smh.com.au/business/economic-growth-picks-up-steam-20100303-phhk.html

Gross domestic product, the broadest measure of the nation’s economic activity, rose 0.9 per cent in the final three months of 2009 to bring the full year’s output to $1.2 trillion – or $55,103 for every Australian.

Today’s increase follows a series of strong economic data, including rising retail sales and a swelling labour market, and will add to pressure on the Reserve Bank to follow up on yesterday’s rise in official interest rates with further increases in coming months

Keep digging.

“the transmission mechanism is easy. you are pumping in money and there is no spare capacity so where does it go?”

They’re pumping in money without monetisation or some other mechanism? Where is the long run view here? Well golly gee Homer. A structural deficit affects short run AD does it? May I ask how?

So let me get this straight – you accept that structural deficits cause inflation but you also reject the fiscal theory of prices.

“But it is the structural deficit that matters.
and no you ain’t mainstream you are cuckoo.”

Funny that you are entirely alone in your extreme hypothesis about the structural deficits, which rejects the fiscal theory of prices.

“Glen Stevens, Ken Henry , OECD, and the IMF are all mainstream.”

Yes they are. They don’t share your bizzare and indefensible ideas.

Big company you keep, homer. Tell me, when you’re around the fire with Glen (sic) Ken, his smother, the OECD and the IMF dudes, do you ever talk about the good times when the only place to try out Keynes was Germany in the 30′s.

Does that discussion ever come up?

It is the structural part of the budget that mainly affects the economy.
If you have a structural deficit over 1% of GDP in a boom of all booms hey presto you boost inflationary forces.

the transmission mechanism is easy. you are pumping in money and there is no spare capacity so where does it go?

errr prices

Costello never run a deficit!
Unlike you I won’t pin his first budgets on him but err 2001.

In a large commodity boom it is rather easy for a very large cyclical surplus to overwhelm a structural deficit.But it is the structural deficit that matters.
and no you ain’t mainstream you are cuckoo.

Glen Stevens, Ken Henry , OECD, IMF and myself are all mainstream.

We do not deny the undeniable nor make stories to rationalise why you get it wrong so often