Friday, February 26, 2016

Then What Was WWII?

I'm not sure why it hasn't come up, but with all the criticism of Friedman's paper on the effect of Sander's proposals, this line from Christina and David Romer's work seems telling:
The estimated demand - induced effects of Senator Sanders’s policies are not just implausibly large but literally incredible.
How do they explain the growth effects of WWII spending?  That happened more than a decade after the start of the great depression and followed a much stronger recovery (though still not fully recovered) but now a similar response is "literally increadible"???  I don't get it.  It's like they know history and so don't want to repeat it but the part they don't want to repeat is a the impressive economic development that started with the New Deal and then surged with WWII.

It's like they've given up on the prospect of a stronger economy.

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