Home > Financial Times, Larry Summers, Martin Wolf, The Atlantic > Larry Summers in the Financial Times

Larry Summers in the Financial Times

My lucky stars: Martin Wolf (!) interviews Larry Summers (!!). 

LS I think there’s a great deal in past policy that will continue to have an impact. One of the things that people most consistently forget is that two generations of studies show that the lag between monetary policy and impact is six to 18 months. So the financial policies that will be affecting the economy over the next nine months are not the contemporaneous ones, but the ones from some time ago. Only about half the resources from the Recovery Act have yet been disbursed. So there is substantial fiscal policy in train.

We are seeing some of the benefits of the financial policies that forced so much capital into major financial institutions in increased levels of lending that are showing up in statistics. We took steps last week to enhance the programmes in support of the housing sector, by enhancing the ability to refinance underwater homes on more favourable terms which should make it significantly easier . . . should reduce pressures in the housing market and should also make it easier for home owners to engage in improvements in their homes of various kinds, all which contribute to aggregate demand.

 I hope rumors of Summers leaving the Obama administration are untrue. 

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