Reply To: Literature on WWII economics


Don’t make too much of the seeming emphasis of fiscal policy to Keynesians and monetary policy to Monetarists, Both agree on the importance of aggregate spending in determining the macro economy. Only in the special case of a liquidity trap, do Keynesians claim monetary policy is ineffective. Romer’s article focuses on monetary stimulus, not in contrast to fiscal, but in contrast to “self-correction” of the market.