CRFB’s new “Announcement Effect Club” Is Popular
Roll out the red carpet and velvet rope, CRFB’s new list of prominent economists, organizations, and opinion leaders that have joined us in suggesting we create a viable fiscal plan now to be implemented as the economy recovers is quickly becoming the hot club to be seen in.
Soon after we unveiled the “Announcement Effect Club” last week, Donald Marron applied for membership, offering this post from October as his creds. He cites the example of Sweden in recovering from fiscal crisis and identifies one of the key lessons of that experience is to “[s]et clear, easily communicated budget goals (e.g., specific deficit targets that get the government debt under control).” He goes on to say that “clear, credible commitments will be rewarded by world capital markets through lower interest rates, which can help offset some of the contractionary effects of tightening the budget.” We are happy to welcome him into the club and apologize for not including him in the original list.
Len Burman of Syracuse University has also earned admission to the club, along with his co-authors, Jeffrey Rohaly, Joseph Rosenberg, and Katherine Lim of a recent paper presented at a conference last week on the looming fiscal crisis. In a footnote they contend, “if corrective policies were adopted early enough that either the size of outstanding debt was “modest” or most of the adjustment could take the form of credible commitments to reduce future government deficits, the macroeconomic effects could be manageable.”
Underscoring the international flavor of this group, Nick Clegg, leader of Liberal Democrats in the UK, joined the group with a Financial Times piece describing the need for his country to set forth a credible fiscal plan in order to reassure jittery markets. He writes,
“The consequences of failure to bring the deficit under control could be very damaging for Britain… Significant cuts are necessary. But the hawks must accept that cuts should come only once tests confirm the resilience of the recovery: jobs, growth, credit availability, international conditions and the cost of government borrowing. The timing of fiscal contraction should be governed by economics, not political dogma… To maintain confidence, it is vital that steps are taken now, before the election, to demonstrate clear commitment.”
Who will be next to join this trendy club? View the complete list here.