We often hear the question “isn’t this economic crisis becoming as bad as the Great Depression?” Economists can offer a variety of reassurances, but each of them is quite circumscribed:
Category Archives: recession
Stop Distorting Spending Priorities into Tax Cuts
It is unfortunate that much of the congressional debate regarding the stimulus package is phrased in terms of a summary statistic: what fraction of the stimulus is to be increased spending and what fraction is to be tax cuts. It currently looks to be about 70-30, but the Republicans say they want more in tax cuts and the Democratic holdouts say they want more in spending.
To judge the merits, one has to go into greater detail.
Origins of the Economic Crisis — In One Chart !
Every two years, Harvard Kennedy School hosts the newly elected Members of Congress for a three-day “briefing” on a wide variety of topics. We had an excellent turnout this week: 40 of the 50 new congresspeople, from both parties. I participated in a panel titled “Understanding the Economic Crisis,” along with Greg Mankiw, Elizabeth Warren and Robert Lawrence (on video).
Trying to explain the origins of the financial crisis and recession in ten minutes, even to the extent any of us understands it, was a tall order. But I tried to cram it all into a single slide. Here it is: