Fiscal Stimulus, Fiscal Inflation, or Fiscal Fallacies?

John Cochrane at Chicago Booth has an essay/review on the use of fiscal stimuli to combat recessions. He provides a much more comprehensive overview of the arguments currently being propounded by Barro and Fama/French (see Jasper's previous blog post "Krguman vs. ..."), which given the current mud-slinging, is quite welcome relief.

Edit: Thought I'd add some entertaining quotes from Arnold Kling at EconLog (another interesting weblog). Via The Filter.

"The main reason for supporting large stimulus rather than small stimulus is that small stimulus efforts have a track record of failure. That's the logic that gave us the Somme Offensive."

"Certified macroeconomists were badly polarized in the early 1970's, with Chicago types essentially denying the idea of involuntary unemployment and the MIT types clinging to macroeconometric models. By the late 1970's, the arguments were over. The models had all sorts of problems, and everybody gave up on them, although people had different reasons for doing so. Methodologically, everyone agreed to work on irrelevant math probems, and substantively everyone agreed that reasonably stable money growth would lead to a reasonably stable economy."