Fiscal Policy x Depressed Economy (DeLong & Summers)

Fiscal policy in a depressed economy by J. Bradford DeLong and Lawrence H. Summers. “This paper examines logic and evidence bearing on the efficacy of fiscal policy in severely depressed economies. In normal times central banks offset the effects of fiscal policy. This keeps the policy-relevant multiplier near zero. It leaves no space for expansionary fiscal policy as a stabilization policy tool.”