Recent quotes:

Nighttime Must-Read: Simon Wren-Lewis: Eurozone Fiscal Policy - Washington Center for Equitable Growth

An additional complication… a country… too competitive relative to the rest of the Eurozone… needs to run a positive output gap… to generate the inflation that will correct that position, and vice versa. For that reason Germany needs a large positive output gap at the moment… therefore a much more expansionary fiscal policy…. So at both the aggregate and individual country level, the inappropriate bias towards fiscal contraction that caused huge losses in the Eurozone in the past continues to operate…
#Macroeconomics #Simon-Wren-Lewis #Fiscal-Policy #Eurozone - equitablegrowth.org

I Understand Where Martin Feldstein Starts: I Do Not Understand Where He Ends Up: Focus - Washington Center for Equitable Growth

Vir illustris Martin Feldstein starts by saying: downward nominal price stickiness is such a thing that we do not have to worry about deflationary spirals in consumer prices. I agree. But I do not understand where his argument ends up: Martin Feldstein: The Deflation Bogeyman: “The world’s major central banks are currently obsessed with… raising their national inflation rates to… 2% per year…. …But is this a real problem?… Fortunately, we have relatively little experience with deflation to test the downward-spiral theory…
#Macroeconomics #Monetary-Policy #Finance #Fiscal-Policy #Martin-Feldstein #Systemic-Risk - equitablegrowth.org

FEBRUARY 2012 VERSION: Budgeting and Macroeconomic Policy: A Primer: The Honest Broker - Washington Center for Equitable Growth

One of the things that was supposed to get done in January but didn’t was a revision of this piece–it is now three years out-of-date, after all, and while it is still useful it is less useful than it was, or would be were I to properly review and update it. But it did not get done in January. It is not going to get done in February. So I am putting it up both as a useful (albeit somewhat out of date) resource, but primarily as a reproach to myself to get cracking on the revision in my copious spare time…
#Macroeconomics #Fiscal-Policy #Political-Economy #The-Honest-Broker #Politics - equitablegrowth.org

Talking Points on "America's Imminent Budget Crisis": Focus - Washington Center for Equitable Growth

Right now, the financial markets are telling us that for the next 20 years at least they expect not a surplus but rather a shortage of federal debt. The interest rates at which investors are willing to hold federal debt now and expect to hold federal debt in the future tell us that it is an extraordinary valuable asset Those interest rates tell us that investors at least think the world economy would be better off with more federal debt than with less. The arguments against having a larger federal debt now are essentially four: that it would be unfair to future generations, that is a source of uncertainty that drags on the economy, that it is a point of vulnerability, and that we cannot trust future congresses to do the right thing to finance it should circumstances change.
#Macroeconomics #Fiscal-Policy #Interest-Rates #Debt - equitablegrowth.org

Mindless and Mindful Austerity: Focus - Washington Center for Equitable Growth

I see that the femina spectabilis Diane Lim is a very unhappy camper: Diane Lim: Are We About to Let All of the Baby Boomers Off the Hook? (Please, No.): “‘Deficit reduction’ and ‘fiscal responsibility’ are ‘out’… …‘Critical investments’ and ‘shared prosperity’ are ‘in.’  Deficits are down to an economically sustainable range…. Our policymakers are no doubt relieved to take a break from having to talk about the hard stuff (spending cuts and tax increases) and getting to focus on the nice-sounding stuff (spending increases and tax cuts)…. Dismissing fiscal responsibility as a socially irresponsible idea is irresponsible…
#Macroeconomics #Fiscal-Policy #Austerity #Diane-Lim - equitablegrowth.org

Morning Must-Read: Yanis Varoufakis: No Time for Games in Europe - Washington Center for Equitable Growth

Yanis Varoufakis: No Time for Games in Europe: “The trouble with game theory… …as I used to tell my students, is that it takes for granted the players’ motives…. In the current deliberations between our European partners and Greece’s new government, the whole point is to forge new motives. To fashion a fresh mind-set that transcends national divides, dissolves the creditor-debtor distinction in favor of a pan-European perspective, and places the common European good above petty politics, dogma that proves toxic if universalized, and an us-versus-them mind-set…. I am convinced that we have one option only: to shun any temptation to treat this pivotal moment as an experiment in strategizing and, instead, to present honestly the facts concerning Greece’s social economy, table our proposals for regrowing Greece, explain why these are in Europe’s interest, and reveal the red lines beyond which logic and duty prevent us from going…
#Fiscal-Policy #Eurozone #Greece #anis-Varoufakis - equitablegrowth.org

Dynamic Scoring Considered Harmful: Focus - Washington Center for Equitable Growth

I had always thought that dynamic scoring was a bad idea because it leads to a ratchet–Democrats when they are in power claim deficit reduction from a stronger economy if their policies are enacted , and then Republicans when they are in power claim deficit reduction from a stronger economy if they undo what the Democrats did. You have no chance of getting policy-effect forecasts that are unbiased on average if you allow the party in power to shape CBO’s estimates of macroeconomic impacts. The vir clarissimus Robert Lynch has a good look at all the other issues in this can of worms:
#Dialogue #Fiscal-Policy #Robert-Lynch #Haruspicy #Dynamic-Scoring - equitablegrowth.org