What If Washington's Tool Kit Won't Work?

摘要

We will soon learn whether the economy operates by the textbook. As the stock market falters, Washington is making the standard antirecessionary moves. In 2001 the Federal Reserve has already reduced short-term interest rates by 1 percentage point. This week it's expected to cut at least a further half point, to 5 percent. Meanwhile, Congress is pondering a tax cut to increase people's purchasing power. By the textbook, these steps ought to pep up the economy. But the textbook could be wrong.