Wednesday, January 21, 2009

Alesina and Zingales on Fiscal Stimulus

From Harvard economist Alberto Alesina and University of Chicago economist Luigi Zingales:

Many are concerned about what we can do to help the poor weather this crisis. Unlike during the Great Depression, we have an unemployment subsidy that protects the poor from the most severe consequences of this recession. If we want to further protect them, it is better to extend this unemployment subsidy than to invest in hasty public projects. Furthermore, tax cuts have a much better effect on job creation than highway