The Zig Zag

200 Years of Deficits

Steve Kirshner observes than Australia has run a deficit for 200 years – so why not the US? Size is the obvious counterpoint but its also worth looking back to see the average size of deficits relative to GDP. As this graph from Alan Taylor’s from a historical perspective 4% was the norm for most of the 19th and early 20th century - its only recently that 2% has become standard. So, questions of size aside, from a historical perspective, the US deficit not that excessive.

However perhaps a more interesting question is" has any developing country run a surplus of say 5-10% for any sustained period of time and not suffered?"