Here's an informative post by Simon Wren-Lewis on the difficulties that EU technocrats are having with calculating structural deficits. Essentially, Eurozone governments have to have their budgets approved by the European Commission. In order to be green-lighted for approval, the budgets have to meet some parameters related to the structural deficit. The problem? Structural deficits can be difficult to calculate in part because the natural rate of unemployment is hard to calculate. And it looks like the Commission is overestimating the natural rate of unemployment, forcing governments to run smaller deficits in a time when you really don't want to run smaller deficits.
Anyway, just something to note whenever chin-strokers propose technocratic solutions.
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