Tilak Mukhopadhyay and Subrata Sarkar of IGIDR have a paper on the topic. It is quite interesting to know the state of economics in the country.
Archive for October 28th, 2010
THis is the title of a new paper I have written. In this I summarise the debates going in US over economic outlook and various policy options.
My reading (little bit though) of Japan in 1990s and US now is in a liquidity trap situation (when central bank policy rate is zero/near zero), a central bank has many options. However, there are two issues. One, their effectiveness is limited. Two, some measures are not practice and cannot be adopted. And when one adds numerous economists’ arguments over benefits and negatives of each option, it is all chaos. Then political situation always plays a major role. With a dip in taxes and surge in expenditure the, government is on shaky grounds. They might want to stimulate but concerns of budget deficit/fiscal multiplier always muddles the whole thinking. Hence, it may not be a liquidity trap but surely a policy trap.
Let me know your comments.