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Stimulus Versus Austerity

Paul Krugman’s recommendation for more public spending is at odds with his own comparison of the U.S. to Japan where aggressive fiscal policy did not stimulate growth, says The New Republic.
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Paul Krugman’s recommendation for more public spending is at odds with his own comparison of the U.S. to Japan where aggressive fiscal policy did not stimulate growth, says The New Republic. According to William Galston, Paul Krugman’s position is that “The Fed should abandon its groundless fears of inflation and work instead to ward off the threat of deflation—the true cause of Japan’s failure to regain economic vitality.” Galston continues, “So is Japan really a better baseline for U.S. policymakers than Greece, and is it close enough to serve as a guide for policy? He concludes that, “There are quantitative differences, and they are large enough to warrant caution about direct policy inferences.”


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