The Jackson Hole conference featured a noteworthy paper by Eric Leeper, a professor from Indiana University, on the economic foundations of fiscal versus monetary policy. While he characterizes the latter as science, he calls the former alchemy. The selection of this paper comes across as backlash against the first bout of critique of the economic profession which was directed against monetary policy by the Greenspan ear. Now it is the turn for fiscal policy.
Leeper's paper highlights some undoubted facts, such as that monetary policymakers are backed by an army of economists producing impeccable scientific work about monetary policy. Fiscal policymakers can only dream of that in their ministries. (Yet, it takes wonder why others, for instance professors like himself, have not filled that void which would promise higher returns on scientific insight than the crowded...
