Central Bankers Hear Plea: Turn Focus to Government Spending.
GRAND TETON NATIONAL PARK, Wyo. Central bankers who gathered here to discuss better ways of jump-starting slow economic growth received a surprising message from their lunchtime speaker on Friday: Stop. Youre making things worse.
Christopher A. Sims, a Nobel laureate in economic science, told the annual conference that increased government spending was required to lift the worlds major economies from stagnation. The pursuit of innovations in monetary policy, he said, is diverting needed attention from the inaction of fiscal policy makers.
So long as the legislature thinks it has no role in this problem, nothing is going to get done, said Mr. Sims, a professor at Princeton. The best hope, he said, is that people at central banks are willing to say publicly that this is what is necessary. . .
Mohamed A. El-Erian, the chief economic adviser at Allianz, warned in a recent book, The Only Game in Town, that time was running out. If developed nations do not increase spending and pursue structural reforms in the next few years, Mr. El-Erian predicted, they will be locked into a new reality of slower growth.'>>>
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