Christina Romer: Good Democrat, Bad Economist

Christina Romer, President Obama's first chief of his Council of Economic Advisers, is now advocating tax hikes, saying that federal spending cuts would be worse for the economy than tax hikes. Coming from just any Democrat, this would not be news. This is news because Ms. Romer did an academic study, with her husband David that showed how harmful a tax increase would be to the economy. I wrote about her original study, in which she concluded that a tax increase of 1% of GDP would cause a recession and then a permanent decrease in real GDP of 1.84%. She had also done previous academic studies which concluded fiscal stimuli are powerless in getting us out of recessions or depressions. These Romer studies were solid academic studies. Her recent one on taxes was published in the American Economic Review, a peer-reviewed journal. It was based on years of data and accepted methods of economic modeling and statistical inference. This kind of study is the way economists earn PhDs. Now...(Read Full Post)