24 Jan 2014

Yes, it’s the economy, stupid, but is it demand or supply?

Paul De Grauwe

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Paul De Grauwe writes in this new CEPS Commentary that the recent and surprising conversion of François Hollande to supply-side economics completes the victory of the northern European policy-makers who believe that insufficient aggregate demand should be fought exclusively by supply-side measures. In his view, however, it is not the first time in post-war history that economists and policy-makers apply the wrong medicine; or to put it differently, it's akin to some generals who fight a new war by applying the strategies developed for the previous war.

Paul De Grauwe is John Paulson Professor in European Political Economy at the London School of Economics and Associate Senior Research Fellow at CEPS.