Focus on Stimulus

Focus on Stimulus

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On September 1, Council of Economic Advisers chair Christie Romer gave her last speech in that capacity. Her main point was that she and Obama’s other economic advisers underestimated just how bad the recession was going to be and thus underestimated  the size of the response that was needed.

In a September 1 commentary, Harvard economist Ken Rogoff expressed skepticism that tax cuts would do much to reduce unemployment. He suggested that a temporary increase in inflation would be more helpful.

In an August 30 commentary, Columbia University economist Jeffrey Sachs suggested that a greater focus on policies to raise long-term growth would improve the prospects for additional stimulus.

Also on August 30, the Federal Reserve Board released a working paper on the operation of automatic fiscal stabilizers. It finds that the federal deficit rises by 0.35 percent of GDP for every percentage point that actual GDP falls below potential GDP.

On August 27, PIMCO’s Mohamed El-Erian posted a commentary arguing that the economic downturn is becoming more structural and less cyclical in nature. This means that we need to concentrate more on long-term growth policies and less on short-term stimulus measures, he says.

In an August 25 commentary, economist Jared Bernstein of Vice President Biden’s staff took issue with Republicans who claim that last year’s stimulus bill has been a total failure. He cites a variety of sources showing that the stimulus added to growth and jobs.

On August 24, the White House released a report on long-term investments in innovation funded by the Recovery Act.

In an August 24 post, University of Wisconsin economist Menzie Chinn was highly critical of a column by Republican economist Kevin Hassett denying that the fiscal stimulus had any stimulative effect whatsoever. Chinn said there is ample evidence that it was stimulative from the same sources cited by Hassett.

I last posted items on this topic on August 25.

Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He blogs daily and writes a  weekly column  at The Fiscal Times. Read his most recent column here. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).

Bruce Bartlett’s columns focus on the intersection of politics and economics. The author of seven books, he worked in government for many years and was senior policy analyst in the Reagan White House.