Martin Wolf argues that there should have been a lot more demand stimulus
in the aftermath of the Great Recession and suggests that this would have
had beneficial effects on both demand and supply (‘In the long shadow of
the Great Recession’, 10 November 2015). He even claims that ‘losses in
output levels and growth rates can be reversed’, although in practice he
admits that there is no chance of the kind of WW2-related fiscal boost that
helped the recovery following the 1930s Depression.

Is he right? I am not convinced. My biggest objection is simple. The
policies he proposes were, in fact, embraced with enthusiasm. In the US,
there were huge tax cuts. In the UK, public spending rose rapidly.
Interest rates around the world fell to levels hitherto unimaginable,
thanks in part to the generosity of central banks. And, partly thanks to
these policies, a deep recession was averted. Read more