World’s Top Economists Worry About Tools To Fight Economic Downturn


So the whole game becomes a big bet that deficits -- created by the government's tax cuts and spending plans -- will boost productivity growth. Treasury Secretary Steven Mnuchin suggested as much last week when he said that the Trump administration's policies could lead to wage growth without inflation, and that people shouldn't worry about the forthcoming deficits. Ironically enough, this policy was espoused by the Bernie Sanders campaign (as my colleague Noah Smith has noted). The idea is that by running the economy hot and making labor more expensive, the government can induce businesses to do more investment than they would in a normal economy. Ever since the financial crisis, a weak economy has discouraged businesses from investing, leading to weaker productivity growth -- so why not try the opposite? It's a theory that hasn't been tested in recent decades, but an intriguing one.

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Source : http://www.independenttribune.com/opinion/columnists/trump-s-economic-gamble-might-make-sense/article_643e096e-73d0-5765-a281-8b5ab2ba0f31.html

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