A Question For Fans Of A Second Stimulus

paulkrugman tbi

The official line out of The White House is that it’s still “premature” to start talking about a second stimulus, but nobody’s listening. Everyone’s talking about it.

So, here’s an honest question for the likes of Paul Krugman, J. Bradford Delong, and other big advocates of a huge fiscal expansion.

Is there any amount of stimulus that would be too big? And how can we know when the cost of the stimulus outweighs the benefits?

In other words, when would you consider the stimulus to be not worth it?

Stimulus advocates must at least accept that there’s such a thing as a too-big stimulus. We don’t hear anyone going around advocating, say, $5 trillion in new spending, even though technically speaking that would create a lot of demand and economic activity. So what is the cap, and how do we know? Inquiring minds want to know.

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