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  5. Will U.S. Growth Be Higher than in Previous Decade after Pandemic Fiscal Stimulus Ends?
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Will U.S. Growth Be Higher than in Previous Decade after Pandemic Fiscal Stimulus Ends?

Paper Session

Friday, Jan. 7, 2022 12:15 PM - 2:15 PM (EST)

Hosted By: American Economic Association
  • Chair: Janice C. Eberly, Northwestern University

New Capital and the Changing Structure of Work

Janice C. Eberly
,
Northwestern University

Abstract

The COVID-19 pandemic forced a dramatic change in the organization of work. Some aspects of this change were already foreshadowed by relative prices of labor and by technologies to unlock capital at home and elsewhere. These underlying trends have important implications for whether changes during the pandemic will be temporary or permanent, and how they may further evolve. We examine the sustainability and implications of changing structure of production wrought by the pandemic – and those perhaps yet to come

The Post-COVID Economy: Boom, Inflation, Bust?

Catherine L. Mann
,
Monetary Policy Committee-Bank of England

Abstract

US policymakers are responding to the COVID pandemic with an extraordinary effort to jolt the economy from a low investment and low productivity economy with high inequality to one that is more equal and characterized by higher investment, strong labor markets, and boosted productivity. But if the boom from policy choices does not catalyze sustained private sector activity, will inflation spiral? If so, policies will need to retrench, leading to a bust. What data should we be looking at to signal which path the economy and policy is on? What role do global forces and financial markets play?

The Evolving Risks of the 21st Century and Their Effective Management

Robert J. Shiller
,
Yale University

Abstract

Risk management institutions can be dramatically reinvented in the 21st century in response to the changing nature of economic uncertainties and changing information technology. There is a risk of greatly increased economic inequality unless we have such reinvention. National and international contracts should manage risks to claims on better-defined economic aggregates and prices of factors of human capital. Declines in the share of the underground economy will make for better economic measurements and better risk management opportunities. The failures of international management of the COVID-19 pandemic provide lessons for such new financial arrangements.

A Turning Point for the U.S. Economy?

Joseph E. Stiglitz
,
Columbia University

Abstract

The United States has been mired in a low equilibrium trap with high inequality and low aggregate demand—so low that even at near zero interest rates it is hard to sustain full employment. The measures introduced by the Biden Administration going beyond the recovery combining large public investments, strong redistributive policies, and well-designed tax policies hold out the promise of combining sustained demand and supply side effects the consequence of which will be higher growth in the previous decade. A further boost on the supply side will come from the complementarity between private and public investment. Moreover, there is likely to be a strong balanced budget multiplier associated with proposed progressive taxes with proceeds spent on public investments. Standard metrics may not fully capture the improvement in economic performance, because they will not fully capture the improvement in the “quality” of growth, the fact that that growth is likely to be more inclusive and more sustainable, and that there will be improvements in the security of many Americans.

Secular Stagnation and Post Pandemic Macro Economic Policy

Lawrence H. Summers
,
Harvard University

Abstract

Trying to avoid secular stagnation and stimulate growth after the pandemic, the United States is running the boldest policy experiment of the last 40 years, which could lead to rapid growth, stagflation, or recession - each with more or less equal probability.

The Effect of the Rescue Plans and the Need for Policies to Increase Economic Growth

John B. Taylor
,
Stanford University

Abstract

This paper evaluates the economic impact of the three fiscal plans enacted during the pandemic in the United States during 2020 and 2021 and compares these with earlier fiscal plans enacted in earlier years including 2008—2010. The three enacted plans are The Coronavirus Aid, Relief, and Economic Security Act, or the “CARES” Act, passed in March 2020, The Consolidated Appropriations Act, passed in December 2020, and The American Rescue Plan Act, passed in March 2021. The paper focuses mainly on the impact of the funds, frequently called “stimulus checks,” sent to qualified people. Both the short run impact and the long run impact are assessed. The paper shows that increased economic growth after the pandemic depends more on structural policies--including tax policy, regulatory policy, financial market policy and international policy--rather than on these counter cyclical policies. The assessments are made using econometric models.

Discussant(s)
Dominick Salvatore
,
Fordham University
JEL Classifications
  • E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
  • H5 - National Government Expenditures and Related Policies