When Textbook Macro Fails
Writes Dani Rodrik:
The surpluses accumulated during the good years has given the Chilean government unusual latitude in responding to the crisis. As a result, the economy is doing much better than its peers. As Bloomberg reports, “the country’s economy is expected to grow 0.1 percent in 2009, as the region contracts 1.5 percent, according to the International Monetary Fund.”
And does good economics pay off politically? Eventually, yes. Five months after being burned in effigy, Velasco is currently President Bachelet’s most popular minister.
Perhaps “macroeconomics” only applies to South American countries. But elsewhere…
…and I’m sure there are plenty of other examples.
Seriously, I’m getting tired of all this. If our biggest economic problem is governments not spending enough money, then I think we have it pretty good.