(email exchange)
They’ve all forgotten imports are a real benefit, exports a real cost, so they are afraid that imports will go up if you make a fiscal adjustment unilaterally.
In fact, it’s the best of all worlds to do it unilaterally and let the imports flood in.
To paraphrase Nixon (?):
‘They are all half baked Keynesians now’.
>
> On Mon, Feb 2, 2009 at 9:53 PM, MAuer wrote:
>
> Any thoughts on this?
>
> Subject: Niall Ferguson in the FT
>
> Today’s born-again Keynesians seem to have forgotten that their prescription
> of a deficit-financed fiscal stimulus stood the best chance of working in a more
> or less closed economy. But this is a globalised world, where uncoordinated
> profligacy by national governments is more likely to generate bond market
> and currency market volatility than a return to growth.
>
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