#4 is a bit misleading. It states "Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)".
While that sounds harmless, a lot of people will take that item and extrapolate it to our current situation and say the correct policy response is to stimulate the economy with fiscal policy. That has to be right since 90% of economists agree right? Well, what happens if you add a little context to the quote and add the text "with high levels of debt as a share of GDP". That 90% number would likely come down massively most likely skewed by biases not related to economic theory.
In short, the quote is very misleading if you are trying to use it as a guide to our current mess. What does this imply the right policy response for us is now?:
We have to make major cuts in areas of excess that have little stimulative impact. This means cutting back on government pensions, entitlement reform, and cutting things like 9/11 contracts that don't provide any real increase in safety.
It means we can also strategically spend in areas that have been neglected the last 10 years like an energy grid for a more stable energy policy, alternatives to petroleum based fuels, a modernized air traffic control system and infrastructure.
At a macro level this means net spending decreases in very sensitive areas like entitlements but also strategic increases that make our country more able to compete like education, energy independence and infrastructure.
While that sounds harmless, a lot of people will take that item and extrapolate it to our current situation and say the correct policy response is to stimulate the economy with fiscal policy. That has to be right since 90% of economists agree right? Well, what happens if you add a little context to the quote and add the text "with high levels of debt as a share of GDP". That 90% number would likely come down massively most likely skewed by biases not related to economic theory.
In short, the quote is very misleading if you are trying to use it as a guide to our current mess. What does this imply the right policy response for us is now?:
We have to make major cuts in areas of excess that have little stimulative impact. This means cutting back on government pensions, entitlement reform, and cutting things like 9/11 contracts that don't provide any real increase in safety. It means we can also strategically spend in areas that have been neglected the last 10 years like an energy grid for a more stable energy policy, alternatives to petroleum based fuels, a modernized air traffic control system and infrastructure.
At a macro level this means net spending decreases in very sensitive areas like entitlements but also strategic increases that make our country more able to compete like education, energy independence and infrastructure.