Multiple equilibria
2009-01-07 · Original WordPress address
Peter Levine:
If we are going to borrow a trillion dollars from our kids to spend now on economic recovery, the money had better be well spent. Avoiding waste and fraud is a political imperative; Obama's reelection may depend on it. It also seems important economically. A big rationale for fiscal stimulus spending is to restore confidence. My guess is that people will feel confident if they believe a trillion dollars is being well deployed--less so, if they think it is being wasted.
Do we really think equlibria are this sensitive to such small expectational perturbations? Has anybody read Roger Farmer and understood it?
I have, but I didn't.
PS - Prof. Levine has some good ideas for putting the budget online... read that post! Do it!