TYLER COWEN has set out his macroeconomic framework, circa 2015. I am surprised at how much there is to his list that I disagree with. Rather than nitpick, however, I'll give my own very general framework. There is a lot of nuance and detail left out of the list below; it is more a set of rough principles.
1) Supply-side policy is hard. Why is America the richest large economy in the world? Well, because output per person has grown at about 2% per year, on average, for a very long time. How did it manage that? I have a long list of policy choices and characteristics and historical accidents that I believe contributed, but I would find it very difficult to say which of those factors were most important. If someone gave me free reign over the German economy and asked me to raise its output per person to American levels, I know the sorts of things I would do, but I have a low level of confidence that I could succeed, or even close much of the gap, within a generation.
2) That doesn't mean that supply-side policy should be ignored. Supply-side reforms (of the sort this newspaper tends to favour) are politically difficult to achieve, but many of them are probably at least somewhat useful and should be undertaken whenever the political environment is...Continue reading
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