Tuesday, July 14, 2009

Compared to What?

One of the difficulties of assessing macroeconomic policies like the fiscal stimulus is that doing so requires comparing the performance of the economy with a "counterfactual" - what would have occurred in the absence of the policy. Of course, we do not really know the counterfactual.

Last night, Barney Frank, Chair of the House Financial Services Committee, explained it well to Jon Stewart:
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