Why Does Stimulus Work? A Follow-Up

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Just a quick note: a few days ago I linked to a John Cochrane post in which he suggested a big difference between the Old Keynesian and New Keynesian explanations for why fiscal stimulus works. Aside from any other disagreements that liberal economists might have with Cochrane, I was curious about whether his description was correct. Well, for those of you who have been sitting on the edges of your seats waiting for an answer, now we have one. Robert Waldmann (here) and Paul Krugman (here) basically say that Cochrane’s story is so fundamentally confused that it’s all but impossible to even criticize it. “Cochrane’s fantasy has so little connection with reality that it is hard to discuss,” says Waldmann. “He can’t be bothered to actually figure out how the models work,” says Krugman. So that’s that. No punches are being pulled in this cage match. Just thought I’d pass it along.

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is the first thing despots go after. An unwavering commitment to it is probably what draws you to Mother Jones' journalism. And as we're seeing in the US and the world around, authoritarians seek to poison the discourse and the way we relate to each other because they can't stand people coming together around a shared sense of the truth—it's a huge threat to them.

Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

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