Mankiw on Fiscal Policy Post author By John McHale Post date December 14, 2009 Greg Mankiw provides a useful overview of recent research on fiscal policy. Categories In Uncategorized 7 Comments on Mankiw on Fiscal Policy ← HGAA Bank Nationalised in Austria → Greek Public Finances 7 replies on “Mankiw on Fiscal Policy” Nate Silver replies: http://www.fivethirtyeight.com/2009/12/greg-mankiw-stimulus-critic-so-wrong.html Krugman also has a sort of reply: http://krugman.blogs.nytimes.com/2009/12/14/a-new-paradox/ These folks are living in fantasy land. A new paradigm? Where is their common sense? These comments seem designed to obscure the true situation to the detriment of those who have yet to learn how mislead they have been by the MSM. The Krugman piece is typical of him: he neglects the real interest rate. As deflation is now the norm, the real interest rate is not what a CB sets but is that plus the rate of deflation. That varies per asset class so chaos is the result! There is no new lending anyway!!! What a plonker! Real interest rates may be as high as 20% or as low as 3%. But where most lending has already been deployed, the real intereest rate is higher. As that is where most new lending might now be deployed, the whole point of his article is wrong. Nobel Prizes for warring presidents and dumb economists! I have spotted a new contrarian indicator! The partisan nature of the economic commentary in the US is disheartening. These are all very smart guys but they seem to be as insterested in point scoring and proving themselves to be right as they are in sorting out the problem. They close people’s minds by attacking their political opponents before the merit of their argument can sink in. @Zhou: “They close people’s minds by attacking their political opponents before the merit of their argument can sink in.” That sounds like the Irish government’s approach to academic discussion of economic policy. bjg There doesn’t seem to be much discussion on short and long term effects of Govt spending on GDP. Comments are closed.