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Saturday 19 Aug 2017 | 17:22 | SYDNEY
Saturday 19 Aug 2017 | 17:22 | SYDNEY

Fiscal stimulus works when it's tried

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6 February 2009 09:58

Sam’s post asks about views on whether fiscal stimulus worked for Japan. One thing worth taking a look at in this regard is Adam Posen’s book on Japan in the 1990s. His take is that Japan basically bungled fiscal policy: stimulus was the right thing to deliver, but Tokyo didn’t deliver anywhere near enough. See, for example this preview chapter, from whence comes the title of this post.

Sam’s post also caught my eye for another reason: the suggestion in the first quote he cites is that fiscal stimulus was tried in the 1930s and failed. But the problem with fiscal policy in 1930s was that it was still far too conservative. Paul Krugman had a go at the argument here, citing the key work of E Cary Brown. See also the neat chart in this Krugman blog post, and this blogosphere debate over Roosevelt's New Deal.

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