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The myths of macroeconomics

In: Controversies in Economics and Finance

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Abstract

It is a myth that interest rate cuts can revive the economy, because spending decisions depend on the economic outlook, such that no matter how low interest rates are, spending will not be affected if the outlook is bearish. Governments may resort to other weapons to revive the economy, including tax cuts and protectionism (to reduce the trade deficit), but these will not work, because they are based on myths. In the meantime, governments will keep on lying about inflation and under-report the inflation figures.

Suggested Citation

  • ., 2020. "The myths of macroeconomics," Chapters, in: Controversies in Economics and Finance, chapter 8, pages 164-187, Edward Elgar Publishing.
  • Handle: RePEc:elg:eechap:19689_8
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