When Discredited Policies Make Sense
A column appearing in Bloomberg View highlights a 2012 American Economic Review piece about economic policy during the Great Depression. In Was the New Deal Contractionary? author Gauti Eggertson argues that certain government actions that would be inadvisable in most conditions were actually helpful in the “emergency” conditions of the 1930s, specifically zero interest rates and deflation. New Deal policies that bolstered monopoly power for firms and simultaneously emboldened unions actually helped to expand the economy in this unusual environment.