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Sunday, April 28, 2013

'Monetarism Falls Short'

I've was making this argument long before the crisis hit, I was among the first to say that monetary policy would not be enough to solve our problems, aggressive fiscal policy would also be needed, and nothing that's happened during the recession has changed my mind. I eventually tired of the debate and assumed everyone was tired of hearing me say we needed more fiscal stimulus -- arguing with monetarists won't change any minds anyway and policymakers weren't about to do more fiscal stimulus - - so I moved on to other things (mostly talking about the need for job creation through more aggressive policy of any type):

Monetarism Falls Short: ... Sorry, guys, but as a practical matter the Fed – while it should be doing more – can’t make up for contractionary fiscal policy in the face of a depressed economy.

Krugman is right.

    Posted by on Sunday, April 28, 2013 at 10:03 AM in Economics, Fiscal Policy, Monetary Policy | Permalink  Comments (39)


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