Alan Blinder, a Princeton economist and former vice chairman of the Federal Reserve Board defends Obama administration fiscal policy and suggest further use of deficit spending to spur private sector activity in “Our Fiscal Policy Paradox”. The efficacy of fiscal policy is hotly debated and not yet empirically resolved and this article was not meant to contribute to that debate, but that was not Blinders intention. He does a great job of explaining the argument for expansionary fiscal policy.
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1 year ago
Fiscal policy is the application of government spending and setting up the level of taxation by government policymakers. With that being said, there are so many ways the government could expand fiscal policy. Although Mr. Blinder is in favor of using deficit spending as a means to increase activity, I believe we need to pull the reins back a little. Tax breaks will help business, but what about keeping or adding tax breaks for families? If the little man doesn't have money to pay the bills or buy the groceries, why would they have the money to go out and buy luxury items? Programs have been implemented recently that I feel are not in the best monetary interest within the US. We need to work on getting out of the never-ending war over in the Middle East. They are breaking the bank. We need to focus that money back into paying off debt. Then, I feel more money could be pumped into tax breaks, public roads, education, health care, etc.
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Macroeconomics
I disagree with Blinder about expanding the fiscal policy because this could bring many conflicts from different perspectives. Such as the politics and opinions from new canidates that would come to the government from the result of expanding the fiscal policy. There will be rules changed, confusion among the society, and disruption in the government.
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