Monetary Policy

Why Were Some Economists Against QE Before They Were For It?


Scott Sumner, a monetary economist who has always thought the Federal Reserve has been too tight-fisted post-crisis, points out that the reasons for being against QE (which Sumner was and is for) and thinking fiscal stimulus (government spending more) is more likely to boost demand are the same now as a couple of years ago; and yet most left-leaning economists seem happy to embrace QE2 now.

Fellow economist Bryan Caplan contemplates Sumner and thinks he sees some political economy behind wanting fiscal stimulus then, and monetary now:

 I suspect that top-tier liberal economists favored fiscal stimulus because they saw a golden opportunity to push big government, not because they saw a technical problem with monetary policy.  Uncharitable I know, but I see no other way to explain their sudden change of heart.