The Coalition Against Fiscal Stimulus
Greg Mankiw provides a list of economists and pundits who either argue fiscal stimulus is less preferred to monetary stimulus in fighting the upcoming recession, or doubt we need any stimulus at all, or that the current approaches to fiscal stimulus are not maximizing the bang for the buck. Greg offers links to their arguments – some of which are quite interesting. Come to think about, I have tended to argue the first and the third points as well so count me in on this coalition – even if I might happen to disagree with some of the points being offered by the other members of this coalition. Don’t get me wrong – I think we need some sort of aggregate demand stimulus, but I have at least some faith that the Federal Reserve’s actions may be get the job done. If I’m wrong – then I’d prefer a fiscal stimulus package that does offer more bang for less bucks.
I noticed something else about Greg’s list – the absence of names such as Paul Krugman and Brd DeLong. Maybe they will also comment on this list.
Update: While Menzie Chinn has some nice things to say about this coalition, he also makes the case that we do need fiscal stimulus. Menzie adds:
Still, I think a fiscal stimulus of 1 percentage point of GDP to soften the slowdown makes sense – as long as we get the maximum “bang for the buck” of deficit spending, and the stimulus is not open-ended … So, I think some serious thought has to be done – do we want a flawed stimulus package, or should we forego the stimulus if we think that most of the resulting deficit spending will not actually do any stimulating of aggregate demand? At the moment, I think we can – and should – try to do better.
Update II: Via Andrew Samwick, we see that Huckabee has joined the coalition:
“The problem I have is that what we are really doing is borrowing about $150 billion from the Chinese, which is where this money has got to end up coming from,” Huckabee said on CNN’s “Late Edition” Sunday. “Then we’re going to give rebates to taxpayers, and that’s great. – I’m glad,” Huckabee continued. “But what will most of them do with it? They’re going to buy things that were imported from China.”. “So I have to ask,” he added, “whose economy is being stimulated the most?” The former Arkansas governor said a better plan would be to provide an infusion of federal dollars to repair and replace crumbling bridges, airports and other infrastructure.
Wow! Is this guy really a Republican?!