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Questo articolo è stato pubblicato il 25 febbraio 2013 alle ore 12:55.


As a result of a deep and persistent deficiency in aggregate demand, the US economy has been operating far below its potential output level. Real GDP relative to its noninflationary potential in 2008-2009, and has remained about 8% below its previous growth path ever since.

This translates into about $900 billion of foregone goods and services this year alone – a tremendous waste reflected in an unemployment rate of 7.9% and a poverty rate of 15%, significantly higher than the average of the past 30 years. And : the longer the economy operates far below its capacity, the slower the growth in its future capacity as a result of diminished risk-taking, foregone investment, and erosion of the skills base.

The significant loss of current and future potential output is all the more remarkable, because it has occurred despite a sustained and unprecedented effort by the Fed to boost demand and hasten the recovery. Fed officials have repeatedly expressed concern that the prolonged weak recovery will inflict future pain in the form of slower long-run growth.

Motivated by this concern, the Fed has held the nominal short-term interest rate near zero – its effective lower bound – for more than five years, with a promise to keep it there until 2015, and has been purchasing about $1 trillion of long-term government bonds each year. As a result, the nominal , a widely used measure of the federal government’s borrowing costs, hovers around 2%. That is higher than the record low of 1.4% hit in 2012, but less than half the pre-2008 level and less than a third of its 40-year average. In real terms, both short-term and long-term interest rates remain in negative territory.

has found that the multiplier for discretionary fiscal policy – the change in output caused by a change in discretionary government spending – is larger when nominal interest rates are low and there is a significant amount of underutilized resources. These conditions describe the US economy as it faces yet another round of government spending cuts that would have negative multiplier effects on GDP and job growth.

Indeed, these effects are likely to be larger than expected compared to conventional multiplier estimates, which rest on two assumptions: the economy is close to full employment; and the contraction in demand caused by a cut in government spending will be offset by a drop in interest rates. Neither assumption applies today.

Even worse, the sequester’s across-the-board spending cuts make no distinction between effective and essential programs and programs that represent special interests or have outlived their original purpose. Such arbitrary cuts are likely to inflict more damage on the economy than sensibly targeted cuts of the same magnitude.

The sequester is the product of ideology and political stalemate. It has no economic justification. In the long run, additional targeted spending cuts will be necessary as part of a balanced package to stabilize the debt/GDP ratio. But they are not necessary now. Indeed, by endangering the economy’s halting recovery, they would be counterproductive.

Laura Tyson, a former chair of the US President's Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley.

Copyright: Project Syndicate, 2013.


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