Thread by @delong

@Claudia_Sahm But we are, again. & this time the political considerations are all on the side of the Republicans cooperating to try to boost employment...

I watched Markus Brunnermeier & Gita Gopinath earlier this week make the case that "it's not stimulus, it's insurance for SME survival" 1/

@Claudia_Sahm Both of them seemed to me to be on the edge of tears—although it is hard to tell given low video bandwidth.

It seems that Republican legislators & professional Republican economists actually believe that fiscal multipliers are zero. Which is distinctly odd. They believe that 1/

@Claudia_Sahm monetary policy affects prices, which means that lowering interest rates induces some agents to spend more, and that spending more than increases aggregate demand. Yet somehow the government deciding to spend more does not increase AD, even though it would if the government 2/

@Claudia_Sahm were a private corporation.

You might say, "well, they believe in Ricardian equivalence". But with r < g there is no Ricardian equivalence. &, anyway, you cannot believe in Ricardian equivalence, fiscal neutrality, & that the poor are poor because of high rates of time 3/

@Claudia_Sahm discount.

I think that back in the 1990s we taught them that you should behave **as if** fiscal multipliers are zero because Alan Greenspan is explicitly pursuing a policy of full monetary offset. & they—legislators, & economists who happen to be professional Republicans 4/

@Claudia_Sahm alike—never grasped that that argument depended on the Fed having the power & the desire to engage in full monetary offset of fiscal policy shifts... 5/END