Hal R. Varian

In an editorial published in the Wall Street Journal (January 7, 2009), I argue that the economic stimulus policies should emphasize firm investment incentives.  We want to come out of this recession with a higher consumer savings rate than we have seen in the past and this necessitates a higher level of investment.  Direct stimulus of consumption is problematic because consumers are likely to be cautious in spending. Public infrastructure investment can be subject to political compromise and is frequently too late to be effective.  Private investment, on the other hand, generates future productivity.  While investment tax credits and accelerated depreciation may not be as popular politically as tax cuts or stimulus spending, they may be a more effective strategy for economic recovery.
The editorial can be found at:

http://online.wsj.com/article/SB123129443022559731.html#printMode.

Hal Varian is a professor in the Schools of Information and Business, and the Department of Economics; he is also chief economist for Google.

Both comments and pings are currently closed.