John B. Taylor has long been associated with monetary policy after his contributions to the field, most obviously encapsulated in the Taylor Rule. However, it would sound like he's heading in the direction that Paul Krugman took of getting so mired in politics that one seriously has to call into question his academic integrity. In this defence of a package to cut government spending, he says on the idea that cutting government spending might cause the economy to contract: "Nothing could be more contrary to basic economics, experience and facts"
Really? The basic economics that people tend to make use of when making suggestions that cutting government spending might just have a negative effect on the economy is national accounting identities which say that part of aggregate spending is government spending. The experience? Well, most economies that have tried it when they haven't had some positive external shock to help them (so we're talking currently of the UK and Ireland at the minimum, and many more could be found I'm sure). Facts? Well we've just noted a basic economic model, and given a few experiences to counter Taylor.
But of course, according to Taylor, we're just wrong, plain wrong. That's because he's basing what he says on some model that assumes immediate crowding in when governments reduce spending (in the absence of any evidence for such an effect - but Taylor says these models are more modern so that means they must be right!). Well how about that. A model which assumes that a fiscal contraction will be expansionary finds just that. Mindblowing. And to think people get disillusioned with economists. So in the US, this bill will pass, and sure enough growth won't follow, just like we're seeing in the UK currently. No wonder people like Krugman despair so much...
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