BDL:
Well, my priestly sect right now are pretty confident that we're more
like the Egyptian priests telling people to plant when the dog star
rises just before dawn. The U.S. policy mix in the 1990s (where our
advice was taken) appears remarkably successful . . . .
Much as we morally bankrupt ought to stick together:
The results are one thing. But the nature of the advice &
the commonality of advice and implemented policy are another.
Seems to me on the monetary side, we were continually told of
the need to tighten since inflation was a threat because
the UE rate was too low. Hence the blank check to G-span.
It is fair to say that G's interest rate moves reflected
the advice, but it's not clear, to me at least, that they
had an effect, or much of one, on UE and inflation. If they
did, we would be at the "correct" (sic) level of UE (what, say
5.5%?).
On the fiscal side, we were told a modest stimulus was
indicated for the 1993 budget. This was not obtained.
Afterwards, one is at pains to discern any motive in
fiscal policy other than deficit reduction. The actual
implementation of this motive was not great, compared
to the actual deficit reduction/surplus increase generated
by the economy. So on this count it is not clear how
'advice' can be credited for outcomes.
The most clear channel from advice to policy is in
trade liberalization, but in this case it may be doubted
that openness has much or anything to do with the UE
rate. Perhaps it had more to do with achievements in
re: the trade deficit.
mbs
