Lawrence Summers and Brad De Long, among many others, are arguing
that the productivity/investment/high-tech boom of the mid to late
1990's was caused by Clinton's reduction of the deficit. Summers and De
Long basically argue that *all* of the deficit reduction went into
investment. Neither gives any indication of Ricardian offsets and both
are clear that what was good was *deficit* reduction (not spending
reductions - of which there were none as far as I know).
The Summers/De Long view is fast becoming the new CW, especially in
the hi-tech business press. Yet, are the 1990s really a refutation of
Ricardian thinking? It's well known that personal savings over this
period have been falling, as Ricardian theory would predict.
Comments from the armchair list? Anyone care to crunch the
numbers? I'm not especially wedded to the Ricardian theory but I
suspect nevertheless that DeLong and Summers are exagerating the
evidence for the contra.
Alex
--
Dr. Alexander Tabarrok
Vice President and Director of Research
The Independent Institute
100 Swan Way
Oakland, CA, 94621-1428
Tel. 510-632-1366, FAX: 510-568-6040
Email: [EMAIL PROTECTED]
