A Chicago Tribune editorial on the $800 billion “stimulus” plan noted that not all economists support such a scheme, as many stories in the media are suggesting:
John Cochrane, a professor at the University of Chicago Booth School of Business, says that among academics over the last 30 years, the idea of fiscal stimulus has been discredited and in graduate courses, it is ‘taught only for its fallacies.’
New York University economist Thomas Sargent agrees: ‘The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.’
That’s what I remember from my BA and MA in economics, so I’ve been surprised by the dominance of Keynesian voices quoted in news stories.
Here are some more stimulus skeptics on a panel at the University of Chicago.