Saturday, September 3, 2011

Taking stock of current conditions

Professor Tyler Cowen of George Mason University writes a blog (The Marginal Revolution) that ranked 21rst on WSJ's list of top economics blogs (see WSJ ranking of economics blogs 2009).

Video Interview with Tyler Cowen (13 minutes)

Cowen raises an interesting point;  this recession exposed structural problems that have been brewing in the U.S. for decades.  In particular he thinks the U.S needs to improve its education system in order to sustain growth and innovation.

Economics as a profession is also open for reform.  Cowen suggests that academic economists have become too specialized and don't have much to say - without devolving to partisan politics. This has created a niche for bloggers without pedigrees to weigh in with important ideas.

Despite a libertarian bent, Cowen supports more Fed action to help the U.S. economy recover.

For a good overview of the current state of the U.S. economy see:

(The Economist 8-27-2011) The Economy's Prospects

Here is a question for my students. What do you think about the relative merits of:

1. Further government spending in the short run (say on infrastructure),
    perhaps linked to long term budget agreements.
2. Fed activity to lower long term interest rates

3. Tax and regulation reform

1 comment:

  1. GDP = Consumption + Investment + Government Spend + Exports (less net Imports).

    Therefore, when running trade deficits and BOTH Consumption and Investment drop drastically, a corresponding Government Spend (stimulus) is necessary, even if financed with debt. But given the cost of capital for the US is so low, the Temporary, Targeted, and Timely Stimulus should be designed for maximum benefit for US infrastructure and associated employment. This should NOT be construed as a Democratic social wish list, but a well designed program such as Works Progress Administration was.