OPTIMAL FISCAL POLICY IN A LIQUIDITY TRAP (Paul Krugman)
The must-read short note from Paul Krugman: OPTIMAL FISCAL POLICY IN A LIQUIDITY TRAP. The next step would be to explore the international dimension. My prior hunch is that the depreciation is inevitable irrespective of massive fiscal stimulus, given the premise that the zero interest rate won't change. We should work it out, though.
Memo to self: Speaking of international dimension, I would say that Joseph Nye's old sensitivity vs. vulnerability distinction could be worth revisiting. That is what I thought, when I read Katsuhito Iwai's viewpoint at 2009/01 issue Bungei-Shunju, which talks about "the transition" to a new phase of global currency.
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