Precisely. The only substantial flaw with the cap on the structural deficit is the fact that they will almost certainly define the full employment point in a NAIRU sense and so will massively understate the structural GDP at "full employment" by massively understating what full employment really is.

But the only way to square the 3% structural plus cyclical deficit cap at the sub-sovereign level is for some system of providing grants from the economic sovereign level to the sub-sovereign level, eg, the EU issues grants to the members in proportion to population equal to 25% of the excess of the EU wide output gap over 5% of EU GDP.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.