So I really cannot understand Barro s last paragraph The fiscal stimulus package of 2009 was a mistake. It follows that an additional stimulus package in 2010 would be another mistake...

Now we're running a stimulus package.

It's called the trillion dollar stimulus package.

Is Fiscal Stimulus Pointless?

The Bogey of Fiscal Stimulus

The Case for Fiscal Stimulus

BEIJING Now that the green shoots of recovery have withered, the debate over fiscal stimulus is back with a vengeance. In the United States, those who argue for another stimulus package observe that it was always wishful thinking to believe that a 787 billion package could offset a 3 trillion fall in private spending.

The new Obama administration and the Congress are still working out the structure of the fiscal stimulus for the US. Although I support the need for a large fiscal package, I disagree with many of the specific features of the plans now under consideration.

And then we do the OPEC stimulus package also known as 200 dollars a barrel.

Since then, we got about 50 million dollars in stimulus package money to come and get here.

And some of the government spending in the stimulus package will replace other outlays that would have occurred anyway. An optimistic estimate of the direct increase in annual demand from the stimulus package is about 300 billion in each of the next two years.

Last month, China announced a 586 billion economic stimulus package, some 25 of which is to help bolster conservation, environmental protection, and renewable energy efforts. We hope that the new stimulus package helps to move China toward greener development, and that countries follow suit.

LONDON At their meeting in Rome last Thursday, the leaders of the eurozone s four largest economies agreed on steps towards a banking union and a modest stimulus package to complement the European Union s new fiscal compact. Those steps are not enough.

The US Treasury strongly encouraged Asia to tighten fiscal policy during its 1990 s crisis. But today the US Congress and President are tripping over themselves to adopt an ill advised giant fiscal stimulus package, whose main effects will be to tie the hands of the next president in simplifying the US tax code and closing the budget deficit.

To be effective, monetary stimulus needs to be accompanied by temporary fiscal stimulus, which is now lacking in all major economies. Indeed, the eurozone, the UK, the US, and Japan are all pursuing varying degrees of fiscal austerity and consolidation.

So he comes over to this country, and he says, We need a big fiscal stimulus.

The right balance today requires creating jobs partly through additional fiscal stimulus aimed at productive infrastructure investment.

Will near zero interest rates, financial sector bailouts, and fiscal stimulus work? What else could be done?

China s 4 trillion stimulus package, unveiled in November 2008, restored confidence in global commodity markets. Led by strong Chinese growth, emerging markets stabilized.

China s stimulus package was by far the world s largest and most effectively implemented. It stabilized growth in China and moderated the global economic contraction.

The US does indeed face a long run fiscal deficit, largely the result of rising health care costs and an aging population. But the current fiscal deficit mainly reflects weak tax revenues, owing to slow growth and high unemployment, and temporary stimulus measures that are fading away at a time when aggregate demand remains weak and additional fiscal stimulus is warranted.

But the stimulus that is needed on both sides of the Atlantic is a fiscal stimulus. Monetary policy has proven ineffective, and more of it is unlikely to return the economy to sustainable growth.

Moreover, fiscal support is absent this time QE1 and QE2 helped to prevent a deeper recession and avoid a double dip, respectively, because each was associated with a significant fiscal stimulus. In contrast, QE3 will be associated with a fiscal contraction, possibly even a large fiscal cliff.

US and Chinese leaders have fought the crisis with not only massive fiscal stimulus, but also deep intervention into credit markets. Such extraordinary fiscal largesse, all at taxpayers expense, cannot continue indefinitely.

And for that we need fiscal stimulus ideally, the debt friendly stimulus that raises taxes and expenditures equally. The increased tax burden for all who are employed is analogous to the reduced hours in work sharing.

The brute force of massive monetary and fiscal stimulus rings hollow as a cyclical remedy to this problem. Another approach is needed.

During the last two years, the government has tightened fiscal and monetary policy, in the hope of offsetting the adverse effects of the large stimulus package implemented in response to the 2008 global financial crisis. Li s Davos speech was intended to signal that the Chinese government will not allow the growth rate to slip further.

With respect to Obama s stimulus package, it seems to me that there has been extraordinary intellectual and political dishonesty on the American right, which the press refuses to see.

CAMBRIDGE Governments around the world are now developing massive fiscal stimulus packages that will cause unprecedented peacetime budget deficits. The fiscal deficit in the United States this year is likely to exceed 10 of GDP.

Fiscal reform We desperately need you to eliminate the looming fiscal cliff in the context of medium term reforms of both the tax system and entitlements. This would also allow for greater fiscal stimulus at a time when other components of aggregate demand are slowing.

Yes, we were all Keynesians but all too briefly. Fiscal stimulus was replaced by austerity, with predictable and predicted adverse effects on economic performance.

Now it has responded, with a stimulus package that is too little, too late, and badly designed. To see the inadequacy of that package, compare it with the more than 1.5 trillion that was borrowed in home equity loans in recent years, most of it spent on consumption.

Fiscal stimulus in Europe may still be justified, but structural rigidity will lower its impact on long term growth. Europe s fiscal interventions would be easier to justify if they were accompanied by microeconomic reforms targeted at increasing flexibility.

Unfortunately, the fiscal policy currently adopted by various advanced economies deviates sharply from this path of credible medium term consolidation combined with short term additional stimulus.

A stimulus package of less than prudent fixed asset investment, adopted in response to the 2008 global financial crisis, sustained 9 GDP growth for two years. But, after 2011, stimulus turned to macroeconomic tightening, causing investment growth to plummet from a nominal rate of over 30 to about 10 recently.

The cure, such as it was, finally came about, years behind schedule, not through fiscal bleeding, but by massive monetary stimulus. When the groggy patient eventually staggered to its feet, the champions of fiscal bleeding triumphantly proclaimed that austerity had worked.

LOS ANGELES The debate over fiscal expansion versus consolidation continues to divide the developed world. In response to the global recession of 2008, the United Kingdom embarked on an austerity program while the United States enacted an 800 billion fiscal stimulus.

Even so, some economists still advocate more fiscal stimulus. Instead, Western leaders need to focus on fixing their state budgets in order to salvage what they can.

The Federal Reserve will thus be able to ease monetary policy then to offset the fiscal drag. So Barro is simply wrong when he claims that although the stimulus boosts employment now, amortizing the stimulus must inevitably reduce employment at some point in the future.

Contrary to the current discourse, the long term solution must provide a stimulus to get Europe out of a deflationary vicious circle structural reform alone will not do it. The stimulus must come from the EU, because individual countries will be under strict fiscal discipline.

A vicious circle, it seems, is at work. The way to break it, according to Summers, is to sustain monetary stimulus and boost demand aggressively through fiscal policy.

But, instead of investing, they are building up liquidity. Perhaps a Republican victory will boost their confidence, but in the meantime investment and employment require fiscal stimulus (monetary stimulus, by contrast, would be more likely to stimulate corporations to devour each other than to hire workers).

Greece, which carried out the biggest fiscal stimulus, is the country whose economy has suffered the most damage. Its depression continues, whereas countries like Latvia, Lithuania, and Estonia, which carried out early, radical fiscal adjustments and liberalized their economies, are enjoying strong growth.

The recent 568 billion fiscal stimulus package, which will be spent on railway expansion, subway construction, low budget housing programs for the poor, irrigation systems, rural social security, and health care, will add a few percentage points to growth over the next couple years. With monetary policy and some of the administrative controls on investment and local spending being relaxed, the slowdown should be brief.

The first is transatlantic divergence over how best to assure a return to solid growth. The United States favors continuing economic stimulus, while the European Union prefers fiscal consolidation.