stimulus lost the economist.

Read the following quote from CHRISTINA ROMER, outgoing head of President Obama’s Council of Economic Advisors. Based on this quote, explain her position on the necessary steps for an effective fiscal policy. Furthermore, analyze her perspective in terms of the way such policy could be successful.


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Stimulus Lost, “The Economist,” September 1, 2010

CHRISTINA ROMER said the following:

The Administration understood that the recovery would be difficult precisely because many of the usual drivers of growth were missing. That is why we included $266 billion of additional temporary recovery measures in our 2011 budget. Congress has taken some important steps, including extending unemployment insurance, allocating funds to prevent teacher layoffs, and passing the HIRE tax credit to encourage firms to hire unemployed workers. However, it has enacted substantially less than what the Administration proposed. As a result, the economy has not had all the additional support that it needed.

While we would all love to find the inexpensive magic bullet to our economic troubles, the truth is, it almost surely doesn’t exist. The only surefire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less. In my view, we should be moving forward on both fronts.

Mini Essay writing is expected to be at college level. Consequently, excellent writing quality will be rewarded with extra points, while a poorly written essay will get points deducted. Content quality is judged based on demonstrated mastery of course materials. This includes command of key terms, use of technical concepts, recognition of issues, coherent understanding of theory, and ability to illustrate ideas with concrete examples.

 
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