Since this blog entry is about the US, I have chosen to write this
entry in English. The regular Swedish programming will return shortly.
UPDATE: Added a couple of sentences on the credit crunch versus liquidity trap discussion.
UPDATE 2: In a new entry, here,
I discuss today's entry by Paul Krugman, in which he takes issue with
bloggers like me, who discuss whether the US is in a liquidity trap. To
avoid a debate on definitions, I try to move beyond the word "liquidity
trap" and look at the existing situation.
In US macro economic debate, there is currently a lot of focus on the
benefits of various forms of stimulus and on what the state of the
economy actually is.
The debate has degenerated into a political
cage match in which normally very articulate professors make very crude
and naive comments. It seems that economists currently do not believe
in presenting a reasonably balanced picture based on modern economic
research by researchers belonging to different schools of thought.
Instead, most economists seem to present an extremely simple picture,
based on a very narrow set of assumptions that fit their own political
view, without caring at all about any research results pointing to
other realities.
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