Friday, March 13, 2009

Romer on the Great Depression

I have found the recent must reading. Christina Romer gave us 6 lessons from the Great Depression. Here's just the summary:

(1) A small fiscal expansion has only small effects.

(2) Monetary expansion can help to heal an economy even when interest rates are near zero.

(3) Beware of cutting back on stimulus too soon.

(4) Financial recovery and real recovery go together.

(5) Worldwide expansionary policy shares the burdens and the benefits of recovery.

(6) The Great Depression did eventually end.

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