Fiscal stimulus vs. quantitative easing
I've been puzzled by many things surrounding the rancorous macroeconomic debate. One has been the relatively subdued debate on the optimal balance between fiscal stimulus and unconventional monetary policy (aka, quantitative easing). Long ago I expected a modern revival of Keynes vs. Friedman monetarist debate. There was some discussion but it has seemed subdued relative to what I would have expected. My impression was that this didn't happen because it seems most conservatives don't like either fiscal policy or aggressive monetary policy (yet another puzzle). I also thought that, maybe, the liberal-moderate wing of economists preferred fiscal stimulus because they thought the size of government was probably a little too small anyway. But now I think the truth is we know little about quantitative easing and this makes economists of all stripes nervous. And what little is known isn't especially encouraging. In any case, I like the fact that Krugman has responded