Currently mostly Republican deficit hawks are clamoring for so-called fiscal responsibility, and Germany just announced a spending reduction. Krugman thinks all this is nonsense. Now, so does Martin Wolf:
"When Japan – or Canada or Sweden – tightened in the 1990s, a buoyant world economy could absorb excess domestic supply. There is no world economy big enough to offset renewed contraction in Europe and the US.... Premature fiscal tightening is, warns experience, as big a danger as delayed tightening would be. There are no certainties here. The world economy – or at least that of the advanced countries – remains disturbingly fragile. Only those who believe the economy is a morality play, in which those they deem wicked should suffer punishment, would enjoy that painful result."
---Martin Wolf via Brad DeLong, 6/8
No comments:
Post a Comment