Ricardo Hausmann: The Venality of Evil: "Paul Samuelson once commended macroeconomics for having transformed 'the pre-war dinosaur into a post-war lizard'. The discovery of the mechanisms by which large economic fluctuations occur had led to an understanding of how to use fiscal and monetary policies, to tame, if not to prevent, crises such as the Great Depression...

...when the US economy shrank by 28.9% between 1928 and 1933. Economists have been much criticized for the post-2008 Great Recession, but thanks to prompt fiscal and monetary action based on macroeconomic theory, GDP fell by only 3.1% in the United States. In Europe, despite the large external deficits in some of the European Union’s southern and eastern members at the outset of the crisis and the fetters implied by the euro, the fall in GDP was held to less than 10% in hard-hit Ireland, Italy, Portugal and Spain. Here, too, aggressive–and at the time controversial–policy action, especially by the European Central Bank, helped contain the fallout from the near-collapse of the global financial system....


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