by Mario Rizzo
What has been disappointing about the recent stimulus vs. austerity debate is the recycling of arguments that have been gone over many times before in many newspapers and blogs. The debate has become tiresome and unenlightening.
The major feature of the debate that is responsible for the lack of enlightenment is, well, its unrelenting macro-aggregate character. The main variables are excess demand for goods, excess supply of financial assets, total government spending, deficit to GDP ratios, government debt to GDP ratios, the confidence of economic agents in government bonds (as measured by yields), and so forth.
Is there anything important going on beneath the surface – factors that have a more direct causal relationship to the decisions of real economic agents?
Now a breath of fresh air! Continue reading