Wednesday, February 18, 2009

"News Flash: Economists Agree"

Hat tip to Atlantic blogger Andrew Sullivan for linking to this post by Greg Mankiw, the Harvard economist and former Bush Administration Chairman of the Council of Economic Advisers: "News Flash: Economists Agree". From Mankiw's post,

The recent debate over the stimulus bill has lead some observers to think that economists are hopelessly divided on issues of public policy1. That is true regarding business cycle theory and, specifically, the virtues or defects of Keynesian economics. But it is not true more broadly.

Mankiw goes on to list fourteen propositions on which a majority of economists agree, according to various polls of the profession. The fourth one is the most relevant to the recent stimulus debate:

Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)

Mankiw adds,

Note that the proposition about fiscal policy (#4) does not distinguish between taxes and spending as the best tool for purposes of macro stabilization. Maybe that question should be added in a future poll. I doubt, however, that the answer would make it onto this list of widely agreed upon propositions.

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