With a hat tip to Greg Mankiw, let’s turn to If, When, How: A Primer on Fiscal Stimulus - specifically principles 2 and 3 that any fiscal stimulus be well targeted and temporary.
This paper was published on January 10, 2008. On the very next day, the WSJ oped page featured The Right Stimulus. Just about everything claimed by the WSJ was refuted by Elmendorf and Furman. I wish I had cited their paper when I wrote this.
3 comments:
How come Larry doesn't go whole hog and say we should RAISE taxes like Clinton did in 1993, that worked great!
WB - Larry is a supply-sider. His agenda precludes him from praising Clinton's fiscal policies.
"Larry is a supply-sider. His agenda precludes him from praising Clinton's fiscal policies."
...and his benefactors would be most displeased at his suggesting that they contribute to the economy from which they have benefited so well. Remember, they don't wnat to pay a fair share of the tax burden so that they will be free to reinvest their wealth and thereby benefit the rest of us when the "trickle down" begins to flow. That's what we call "treacle up" economics. The sweet stuff goes up and the flotsam trickles down, if we're even that lucky.
Keep in mind the well worn words of the esteemed 1950s economist, W. Sutton, who when asked about economic theory concerning motivations stated, "Because that's where the money's at." You'll find that philosophical perspective lurking behind and underneath most, if not all, sponsored thnk tank product.
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