The Case for Another Stimulus

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The unemployment rate is higher than the Administration forecast.  From a Keynesian perspective, this suggests that the need for a stimulus is even greater than when President Obama took office.


I would score one point for those of us who argued for a stimulus that takes effect in 2009 rather than in 2010 and beyond.  We could still do that, by enacting a payroll tax cut, effective immediately.

However, if a "second stimulus" means piling on more spending in 2011 and beyond, that might prove counterproductive by raising interest rates and depressing the economy in the short run.

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Arnold Kling

Arnold Kling earned his Ph.D in economics at MIT. He was an economist on the staff of the Federal Reserve Board. From 1986-1994 he worked at Freddie Mac. He started Homefair.com in 1994 and sold it in 1999. His fourth book, From Poverty to Prosperity, co-authored with Nick Schulz, is due out in April of 2009. He blogs regularly at Econlog.
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