Tuesday, 15 July 2014
Scott Sumner changes his mind.
He said recently here: “But Keynesians have argued that austerity should be very gradual, to avoid derailing the recovery. That’s a fair argument…..”. I take that as suggesting that fiscal stimulus works.
Now contrast that some earlier statements throwing cold water over fiscal stimulus, as follows.
Title of a paper by Sumner, Sept 2013: "Why has the effect of fiscal stimulus been so meager in recent years? "
Statement he made in May 2013: "The fiscal multiplier theory is as dead as John Cleese’s parrot."
Statement made in Dec 2011: “Keynesian economists have never been able to accept my assertion that the fiscal multiplier is roughly zero.”
Title of blog post Oct 2012: "Fiscal policy has no oomph".
You’ll have no trouble digging up other statements he’s made which are critical of fiscal stimulus, but the above hopefully make my point.