Coyne on Krugman and Keynes
Krugman hardly needs me to leap to his defence against Canadian economic flat earthers like Andrew Coyne,Â but here goes.
Coyne’s latest columnÂ arguesÂ that there is a recovery underway in the US which owes nothing to Keynesian stimulus.Â Accordingly, “we can add America post-2008 to the long list of failed experiments in Keynesian demand management.”
“Perhaps Krugman, at least, would claim that this was in response to previous doses of stimulus: that, far from disproving Keynesian theory, this was actually confirmation of it.”
This is strange on at least two counts.
First, Krugman’s thinking is hardly difficult to access, so there is no need to muse about what he has said or would claim.
Second, as any reader of Krugman’s blog knows, heÂ has acknowledged that a very modest US recovery is underway, while pointing out that the US economy is still operating well below its potential growth path.
He argues – incessantly – that the US economy needs additional stimulus if that gap is to be closed, and he has never argued that the first stimulus package had no effect, only that it was far too small to promote a meaningful recovery.
So there is absolutely no contradiction between what Krugman has argued and the fact of a very tepid US recovery.
Coyne goes on to side with the Fraser Institute argument that fiscal stimulus in Canada had no impact – an argument that has been thoroughly debunked by neutral economists such as Serge Coulombe, as reported on this blog.