“His point is very clearly, ‘Spend more.’ Governments should spend more to stop this restraint, and by doing so, they will unlock greater economic activity and output. Importantly, he makes the point that greater output will lead to higher income for households and that the social cost of not doing so is extremely high. He says it’s not an issue of numbers. We think of economists as just being focused on the numbers, on the money. He makes the point that the human cost of a recession is very high. Because people can afford less, they eat less, they enjoy life less, and health outcomes are worse. His second point is, I think, uncontroversial: recessions are very painful events. We should really try to understand how to avoid them and how to mitigate them. I think that every economist or social scientist would agree on that. His first point—about the recession being unnecessary and being caused by excessive government restraint—is extremely controversial. Many people agree, and I think that many policymakers would agree, that governments should do more whenever possible. But it’s not a widely accepted conclusion. I think most of the authors of the books I have suggested would not subscribe to it.” Read more...
The best books on Fiscal Policy
Sergio de Ferra,