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Tuesday, March 25, 2014

Wanted: A New Approach to Growth Policy

I have a new column:

Broadening the Discussion about Economic Growth, by Mark Thoma: Macroeconomic policy can be divided into two types, stabilization policy that attempts to keep the economy as close as possible to full employment, and growth policy that tries to make the economy expand as fast as possible over time. ...
Prior to the onset of our recent economic troubles, much of the research in economics and much of the political debate was about growth policy rather than stabilization policy. ...
That changed when the Great Recession hit. Suddenly, questions about stabilization policy came to the forefront. ...
Now that we are beginning to come out of the recession ... the focus is once again turning to economic growth. And it’s not just the political right that is thinking about the growth question. The left is thinking about growth too. ...
Increasingly, the idea that the ever-growing inequality can be harmful to economic growth has been taking hold. ...
Cutting taxes in the heyday of supply-side economics did not produce robust economic growth and ever lasting prosperity, and it did not solve the problem of rising inequality. If anything it made the problem worse. As we begin to focus on economic growth once again, it’s time for a new approach, one that recognizes the advantages of a more equitable distribution of income.

    Posted by on Tuesday, March 25, 2014 at 08:59 AM in Economics | Permalink  Comments (30)

          


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