Plain Sense Economics

The U.S. has a temporary reprieve on the debt ceiling limit – tax revenues have come in higher than expected in the early part of the year, reducing the needed pace of borrowing by the U.S. government. While this has pushed the deadline for Congressional action back by a month or more, the rhetoric in [...]

James Surowiecki writes in The New Yorker that a combination of thoughtful, but less visible stimulus decisions and some less effective decisions made it hard for the American people to believe the 2009 fiscal stimulus worked.
[The] Washington stimulus has become the policy that dare not speak its name. This wouldn’t be surprising if we [...]

In our macro class last week we talked about the conflicts between a strategy of prudent saving during hard times, and the need for consumers to increase aggregate demand by spending.
This leads us to the fiscal (sometimes called the Keynesian) multiplier – where government stimulus funds (added spending or tax cuts) cascade through the economy [...]

John Maynard Keynes’ prescription for government intervention to stimulate demand is getting more play in the media and salons these days. There is still some strong, insightful resistance to pure Keynesian policy directions, but his ideas are having something of a renaissance now that the Federal Reserve has lowered its target interest rate as far [...]

…we continue our look at the current economic recession and the various solutions proposed to turn things around…
As noted earlier, the general preference, among economists, is to let the Federal Reserve steer our economic ship, through its use of monetary policy tools. These days, however, the consensus seems to be that monetary policy alone will [...]