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Good Policies and Good Luck - What the U.S. "Fabulous Decade" teaches us and what it does not
Credit and Capital Markets – Kredit und Kapital, Vol. 35 (2002), Iss. 4 : pp. 598–613
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Ullrich Heilemann, Essen
References
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Abstract
The study by Blinder/Yellen is one of the first to examine the macroeconomics of the long upswing in the USA in the 1990s. The authors convincingly reveal the interactions of monetary and fiscal policies and of the many "good luck" factors giving the USA the benefit of vigorous and inflation-free economic growth even in the boom period between 1996 and 2000. However, the study suffers from the fact that far-reaching conclusions have been reached from this brief tension-free period for the stabilisation capacity of monetary policy. It is also to be noted that the legacy from the Clinton Presidency - foreign trade deficit, indebtedness, low savings rate and/or over-investment and over-consumption - has practically been ignored. Thus the picture drawn by Blinder/Yellen has to be qualified also in this respect. (JEL C300, E650, N100)