Wednesday, February 4, 2009

Stimulus Debate: Princeton economists speak out on both sides

At right, the TED Spread, further below, the unemployment rate.

For those of you, like me, who constantly refresh economics blogs and keep yourselves up to date on the TED Spread (an important indicator of credit liquidity; the difference between interest rates on interbank loans and treasury bills) and unemployment , or for those of you who have less interest in finance but are working for Hedge Funds next year anyway (you know who you are!), Princeton's best economists are weighing in on both sides of the debate over the economic stimulus plan currently stalled in the Senate.

Recent Nobel laureate and professor Paul Krugman weighs in regularly on his New York Times blog, "Conscience of a Liberal," where he supports a robust fiscal stimulus plan that focuses on infrastructure investment rather than tax cuts. Krugman's posts are a mixture of arguments intended for laymen, and more "wonkish" posts on technical economics.

Harvard Professor and Class of 1980 graduate N. Gregory Mankiw expresses more skepticism of the plan moving through Congress, with posts on the "Problem of Hasty Public Investment," and whether the package is "Temporary, Targeted, and Timely."

Professor and former Vice Chairman of the Federal Reserve Alan Blinder writes regularly for the New York Times on the financial side of the crisis, discussing the mistakes that got the nation where it is today, and debates the stimulus in a lengthy podcast on NPR.

Of course, former Professor Ben Bernanke continues to lead the Federal Reserve's response to the crisis, and spoke earlier in January summarizing the Fed's bold new programs and his view of the necessary steps to continue responding.

Paul Volcker, of the class of 1949, has been working in government economic policy for more than 50 years, and helped quell inflation as the Federal Reserve chairman in the early 1980s. He's back in the center of economic policy in the White House, working on plans for greater regulation of the financial system.


Anonymous said...

The economists critical of the stimulus (such as Fama) also usually subscribe to the fallacious "Treasury view" refuted more than half a century ago. Fail.