Fiscal Policy: Department of "Huh?!"

The Economist Asks: "Are current deficit reduction plans likely to boost growth?"

And Roberto Perotti answers:

The honest answer is that we don't know: THE honest answer to the question of whether fiscal retrenchments will boost growth is that we have no idea. In monetary policy, we all agree that a hike in the federal funds rate will slow down inflation and growth; there might be some disagreement on when and by how much, but even that is limited. No such thing when it comes to...