Ep. 2: Supplying a fiscal lifeline

There’s little doubt that the US has entered a recession. Stock markets have been continuously rattled since February, and over 20 million people filed for unemployment last month.  Fortunately, economists have learned a lot about fighting recessions since the 2008 financial crisis, according to our guest today.  Valerie Ramey is a leader in the field of fiscal-policy research. She has spent her career trying to pin down multipliers that measure the impact of government spending and taxing on the overall economy.  She says there are many worthwhile steps the government can take to support households and business during a slump, but the timing and circumstances can’t be ignored. That’s especially true of the current situation. (If you think back to the financial crisis, things seemed to be moving so quickly then. Well, that was a snail’s pace compared to the pace at which things are moving now.) Ramey summarized the outpouring of fiscal research over the last ten years in the Spring 2019 issue of the Journal of Economic Perspectives.   The American Economic Association spoke with her about why economists were caught off guard by the last recession, the best tools for fighting the current downturn, and what we should expect from the government’s fiscal response so far. Theme music by Sound of Picture.