Policymakers are focusing too much on the costs of fiscal stimulus packages, rather than their benefits, said Joseph Stiglitz, Nobel laureate and former chief economist at the World Bank, on the opening morning of the Credit Suisse Asian Investment Conference in Hong Kong yesterday.
Consequently, these spending programmes may be too tepid, especially when, as in the United States, they contain too great an emphasis on tax cuts, and are neutralised by a contraction in expenditure by revenue-starved local authorities that are compelled to balance their budgets.
Stiglitz was also sceptical about US Treasury secretary Timothy Geithner's plan for a public-private partnership to buy toxic assets from banks because it might turn a zero...