strangely absent from all his commentary on inflation prospects and the politically feasible fiscal programmes, as if these were two completely separate subjects.
May I bring into the picture the fiscal outlook. I think a recent piece by Brad DeLong on the past and future of US public debt is a good starting point as any:
The practical conclusion, at least in my reading (the author can correct me), is that as long as the US was able to bring its government deficit to 3 percent of GDP (coincidentally corresponding to the much derided EU fiscal rule) in the medium term, there was no reason to worry about the US public debt. If not … well the piece concluded by quoting Stern’s law « If something cannot go on forever, it will stop.»
The question then becomes how the accumulation of public debt would come to a stop, if the US polity is unable to get its act together on targeting the kind of fiscal deficit that Brad DeLong considers sufficient to assuage concerns about the sustainability of public debt.
One need not be a follower of the Fiscal Theory of the Price Level to conclude that the Fed may have problems in controlling inflation.
I think this line of argument is at least implicit in the conclusion of the quoted Brad DeLong’s piece on public debt. It is however strangely absent from all his subsequent commentary on i
Thank you for taking up the recent Adam Posen piece for Project Syndicate. I read that a couple days ago and thought, “What? This does not reflect correct Krugman-Delong Thought.”
People of this ilk seem to believe that the Fed cannot really be sure that it has tightened enough until it has actually caused a recession. Soft landings are not dreamt of in their philosophy, I guess.
strangely absent from all his commentary on inflation prospects and the politically feasible fiscal programmes, as if these were two completely separate subjects.
May I bring into the picture the fiscal outlook. I think a recent piece by Brad DeLong on the past and future of US public debt is a good starting point as any:
https://www.milkenreview.org/articles/federal-debt
The practical conclusion, at least in my reading (the author can correct me), is that as long as the US was able to bring its government deficit to 3 percent of GDP (coincidentally corresponding to the much derided EU fiscal rule) in the medium term, there was no reason to worry about the US public debt. If not … well the piece concluded by quoting Stern’s law « If something cannot go on forever, it will stop.»
The question then becomes how the accumulation of public debt would come to a stop, if the US polity is unable to get its act together on targeting the kind of fiscal deficit that Brad DeLong considers sufficient to assuage concerns about the sustainability of public debt.
One need not be a follower of the Fiscal Theory of the Price Level to conclude that the Fed may have problems in controlling inflation.
I think this line of argument is at least implicit in the conclusion of the quoted Brad DeLong’s piece on public debt. It is however strangely absent from all his subsequent commentary on i
Thank you for taking up the recent Adam Posen piece for Project Syndicate. I read that a couple days ago and thought, “What? This does not reflect correct Krugman-Delong Thought.”
People of this ilk seem to believe that the Fed cannot really be sure that it has tightened enough until it has actually caused a recession. Soft landings are not dreamt of in their philosophy, I guess.
:-(