zero interest rate policy

Robin Harding

I have a piece about the effects of the US fiscal stimulus in the paper today. My personal conclusion is that it very likely did have large effects (because of interest rates being at zero), but because one can’t test the counterfactual of no stimulus, the only evidence comes from models and historic surveys.

What’s depressing is that nothing has changed since before the stimulus began. The models of the people who said it would work say that it has worked. The models of the people who said that it wouldn’t work say that it hasn’t worked. There is no real evidence – and I suspect that will be the decisive point when economists argue for and against further stimulus.

Here are some links if you want to explore the issue in greater detail: