The stagflationofthe 1970s coincided with congressional efforts to takecontrol of the Fed'sbudgetandtherequirement that it seek both fullemploymentandstableprices.
Federal spending, now 24% of GDP, would be 22% of it if the economy were at fullemployment and therefore bigger, says the Congressional Budget Office (CBO).
In Chile a fiscal law obliges the government to run budget surpluses whenever the economy is at fullemployment and the copper price is above its long-run equilibrium, as estimated by an independent panel.
While each year the heads of state sing from the same hymn sheet in praise of scientific research as a vehicle to achieve the objectives of growth and fullemployment, the first cuts proposed to the future European budget under negotiation yesterday were in this field.