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Tomas Hirst: Worrying about Secular Stagnation and Worrying about Overheating Now are Logically Inconsistent

Summary:
[unable to retrieve full-text content]There is one important note to add to what Tomas says. More aggregate demand from fiscal expansion being OK doesn’t mean that the makeup of that fiscal expansion is what it should be. We want to push to the economy’s capacity, and pushing against that capacity to raise inflation is a reasonable thing to do if you are not ready to embrace negative interest rate policy, but that capacity is still finite and should be used for providing the most important things. On negative interest rate policy, see my bibliographic post laying out what I have written on that topic:How and Why to Eliminate the Zero Lower Bound: A Reader’s GuidePermalink

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There is one important note to add to what Tomas says. More aggregate demand from fiscal expansion being OK doesn’t mean that the makeup of that fiscal expansion is what it should be. We want to push to the economy’s capacity, and pushing against that capacity to raise inflation is a reasonable thing to do if you are not ready to embrace negative interest rate policy, but that capacity is still finite and should be used for providing the most important things.

On negative interest rate policy, see my bibliographic post laying out what I have written on that topic:

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Miles Kimball
Miles Kimball is Professor of Economics and Survey Research at the University of Michigan. Politically, Miles is an independent who grew up in an apolitical family. He holds many strong opinions—open to revision in response to cogent arguments—that do not line up neatly with either the Republican or Democratic Party.

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