Friday, October 7, 2016

We need the accelerator get out the accelerator from moth balls. I (y) baby I (y)

Furman  the mouse

"In theory, when monetary policy is at the effective lower bound, fiscal policy may even be more effective than previously realized. This is because monetary policy will not partially offset fiscal policy through either an interest-rate channel or an exchange-rate channel. In fact, fiscal policy could even crowd in additional private investment to the degree that expanded aggregate demand raises growth rates and thus increases investment growth, as predicted by the standard accelerator model for investment that has done a reasonably good job explaining recent trends in investment (IMF 2015; OECD 2015)."