Re: Euro Rates Slashed

[Doug Henwood <dhenwood@xxxxxxxxx>]

S R Larsson wrote:

>Can anyone who's a POST-KEYNESIAN on this list explain to me how interest
>rate cuts can help cutting unemployment, when at the same time budgetary
>austerity is being institutionalized via the EMU system? I say statistics
>show there is at least a 9:1 advantage in using fiscal policy to boost
>investment -> increase employment, over cutting interest rates.

How can you explain the U.S. in the 1990s then? We've had a sharp
tightening in fiscal policy combined with a fairly indulgent Fed.
Investment levels are fairly high by U.S. standards, esp the prized
producers durable equipment (nonres structures is very low, depressing
total investment figures). But we've had strong employment gains too. In
the U.S., L is cheaper than K anyway.

Doug