Friday, December 19, 2008

Cowen grills Krugman

Nobel-winning economist Paul Krugman responds to questions from Marginal Revolution’s Tyler Cowen on the credit crunch:
1. Where would you find the institutional capability to run a nationalised banking system?

2. Do you have a point estimate of the probability that an ethanol-friendly Congress spends the money for a stimulus plan in an efficacious way?
Good questions, and good answers, as you would expect. In brief:
1. It doesn’t have to be perfect. It just has to be not too bad and get the money flowing again.

2. Will they spend it in a way that is better than nothing? Probability 100 per cent. Will it be spent as well as ideally it should? Zero.
This video has the full monty.

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