DeLong Debt Memo: 2020-11-17
You asked me to think about long-run downside via fiscal drag and higher required tax rates and revenues in the future, after the economy has returned to full employment, from additional debt-financed COVID depression-fighting stimulus expenditures. You asked me to think in the context of Larry Summers’s and my “Fiscal Policy in a Depressed Economy” of a decade ago.
My conclusion: RIGHT NOW THERE IS NO PROSPECT OF ANY FUTURE FISCAL DRAG FROM ADDITIONAL DEBT-FINANCED FISCAL STIMULUS...
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