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It may have been right in the first half of 2009, but a bigger stimulus wouldn't have hurt ('adequate' is not an exaggerated size). And the argument was symptomatic of a general opposition to fiscal stimulus, as we saw by the "crass Keynesianism" "argument" (ahem) of late 2008, the debt brake of mid-2009, and then the panic over EU-wide breaches of the deficit limit at the end of 2009, to be followed by liquidationism and "expansionary austerity" since.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 12:45:41 PM EST
[ Parent ]
but a bigger stimulus wouldn't have hurt ('adequate' is not an exaggerated size).

That is a much weaker claim and you could say the same with more justification about the american stimulus. As far as I remembered krugman admitted grudgingly that the (german) stimulus was big enough for Germany and then aargued oit was to small for the whole EU.

I thought is was to small back then too, but are not so sure now. That said, there was a bot of top on off the original stimulus

 >And the argument was symptomatic of a general opposition to fiscal stimulus, as we saw by the "crass Keynesianism" "argument" (ahem) of late 2008,>

The stimulus in Germany did indeed came months to late, but the resistance had crumbled around the time of the inauguration of Obama.

As far as I remember the stimulus in other european countries wasn't timely too.

by IM on Sat Feb 18th, 2012 at 01:11:47 PM EST
[ Parent ]
The real problem is that the stimulus was withdrawn and then reversed in 2010.

Only now are they starting to make noises about the need to have "jobs-friendly growth and growth-friendly fiscal consolidation". The "growth-friendly fiscal consolidation" is akin to "circle-friendly squaring".

So we're still withholding the necessary stimulus because, you know, 0.1% growth still destroys jobs and physical capital. So the criteria for fiscal stimulus should not be that growth is negative but that jobs are being destroyed.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 01:37:37 PM EST
[ Parent ]

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