Friday, February 6, 2009

Barro Criticizes Stimulus Package

Harvard economist Barro harshly criticizes the fiscal stimulus bills proposed by the government:

This is probably the worst bill that has been put forward since the 1930s. I don't know what to say. I mean it's wasting a tremendous amount of money. It has some simplistic theory that I don't think will work, so I don't think the expenditure stuff is going to have the intended effect. I don't think it will expand the economy. And the tax cutting isn't really geared toward incentives. It's not really geared to lowering tax rates; it's more along the lines of throwing money at people. On both sides I think it's garbage. So in terms of balance between the two it doesn't really matter that much.

Once more, he raises the extremely important question of incentives, which hasn't received adequate attention from policymakers.

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