Misused Theories Behind Trump’s Economic Policies

13 Pages Posted: 20 Dec 2018

See all articles by Edmund S. Phelps

Edmund S. Phelps

Center on Capitalism and Society, Columbia University

Date Written: December 19, 2018

Abstract

The fundamental economic problem in America and most of Europe, too, is the Great Western Slowdown and the ensuing symptoms: weak investment, generally falling rates of return on investment, enlarged markups, declining job satisfaction, and near-disappearance of exhilarating growth. This fifty-year decline is not addressed by our politicians—least of all by President Donald Trump. Recent economic policies, not just Trump’s, have relied on and misused Keynesian theory. Through a survey of 14 OECD countries, I analyze the effectiveness of fiscal and monetary stimulus on a country’s speed of recovery from the Global Recession of 2008. The results support my position that today’s politicians need to focus not on stimulating demand but nourishing economic dynamism.

Suggested Citation

Phelps, Edmund S., Misused Theories Behind Trump’s Economic Policies (December 19, 2018). Capitalism and Society: Vol. 13: Iss. 2, Article 1. Available at SSRN: https://ssrn.com/abstract=3304802

Edmund S. Phelps (Contact Author)

Center on Capitalism and Society, Columbia University ( email )

420 W. 118th Street
New York, NY 10027
United States
212-854-2060 (Phone)
212-854-8059 (Fax)

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