A few different angles to the debate about recovery economics from the US. Christina Romer’s argument about ‘bubble free growth’ sets out the basic argument that future US growth must draw heavily on investment and exports – a point echoed by Fed chief Ben Bernanke in testimony to the Senate Banking Committee. Asked; ‘What will the recovery look like? He answered ‘Slow. The American consumer is not going to be the source of a global boom by any means”
Meanwhile, Larry Summers’ progress report on the US Recovery Act to the IIE underlines – contrary to a prevailing view amongst some economists – the importance of fiscal stimulus that was ‘speedy, substantial and sustained’ alongside aggressive monetary policy. Summers also highlights the difference of this recession to others, in that productivity is going up not down as output is delivered with fewer workers as companies shed workers at a faster rate than predicted; Robert Reich’s cautionary words on the Dow Jones’ passing through the 9,000 mark, echoes the same sentiment. Ben Bernake sets out his view that the pace of decline has now slowed, but again risks remain to employment, and the US needs a medium term fiscal consolidation plan. Meanwhile, the debate rages about the pros and cons of a further stimulus. Hat-tip to Harvard’s Greg Mankiw.