The Stimulus Debate Goes On
Posted at 8 a.m. on Jan. 23
Raghuram Rajan argues that the “only sustainable solution” to a financial crisis “is to allow the supply side to adjust to more normal and sustainable sources of demand – to ease the way for construction workers and autoworkers to retrain for faster-growing industries.”
“The worst thing that governments can do is to stand in the way by propping up unviable firms or by sustaining demand in unviable industries through easy credit… The advanced countries will spend decades working off high public-debt loads, while their central banks will have to unwind bloated balance sheets.”
But Menzie Chin provides data indicating that “the slow growth we have experienced thus far is partly the result of insufficient fiscal stimulus.”
