To fight the next recession, the government might send you money so you can go out to dinner with friends

Published: Jan 4, 2020 2:55 p.m. ET


7073彩票注册Economists are brainstorming new ways to get economy moving because interest-rate policy may not be able to do more

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Senior economics reporter
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It’s more than just a good time. It’s helping to end the recession.

“Damn. The economy is recession. OK, honey, grab your coat, we’re going out to eat.”

Not exactly what you’d expect to hear in an economic downturn, but that might change.

With interest rates already so low, the Federal Reserve can’t fight a downturn by itself, and so economists are casting about for new ways that government spending can be used spur demand.

And funnily enough, one excellent way to get your local community humming would be to send everyone a $1,000 coupon to be used for dinner at restaurants of their choosing, said Gabriel Chodorow-Reich, an economics professor at Harvard University.

7073彩票注册The coupon, which would expire in six months, gets money directly into the local economy. If you just gave households a debit card, they might buy a television that was made overseas, which dilutes the stimulus.

7073彩票注册Restaurant spending has a very small import content as most cooks source locally. And restaurants are labor-intensive, so you’re putting money into workers pockets.

“It checks all the boxes,” Chodorow-Reich said in an interview with MarketWatch at the American Economics Association conference in San Diego.

7073彩票注册The policy does have some drawbacks, Chodorow-Reich admitted. “If I was critiquing this policy, I’d call it the ‘let them eat cake’ policy,” he said, laughing.

It’s not the best thing to tell someone who has lost his job that you’re letting them go out to eat, he said.

7073彩票注册There are political economy problems too as movie theater owners would revolt, he said.

7073彩票注册Still, the idea, although somewhat far-fetched, illustrates the dilemma facing economic policy makers.

For decades, it was the conventional wisdom that central banks like the Fed were the best institution to counter a downturn. The U.S. Congress was seen as too slow.

This thinking changed after the Great 7073彩票注册 in 2008, when interest rates set by the Fed got stuck at zero for seven years. The U.S. central bank tried unconventional policies, buying government bonds or quantitative easing, that proved politically unpopular.

7073彩票注册At a panel at the American Economic Association, economists discussed a range of ideas to use fiscal policy to counter downturns.

Former U.S. Treasury Secretary Lawrence Summers suggested that Congress develop “semi-automatic stabilizers” or targeted spending that would be triggered automatically if there was a rise in the unemployment rate.

This would help get around the sometimes slow pace of Congressional decision-making.

7073彩票注册 Greg Robb is a senior reporter for MarketWatch in Washington. Follow him on 7073彩票注册 @grobb2000.

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