A bit unfair to comment here on Barro, but since I can't do it there w/o paying, here goes:
I basically agree witheverytning except that student debt forgiveness is inflationary. Ceteris paribus it increases the deficit and that sucks a few more resources from investment into consumption and THAT is a reason to oppose forgiveness. But if the Fed has an inflation target as it apparently does, the deficit implications of forgiveness or non-forgiveness is just one more or less thing it need to consider in setting the values of its policy instruments to achieve its inflation objectives. In other words it is NOT inflationary, it means higher interest rates.
I am very much not an Econ Guy, but I think the counter to that is probably a matter of time lags. That is, loan forgiveness is going to drive spending right now, while Fed rate hikes push inflation down over a longer term. So it could be short-term inflationary but a wash in the long term. But electoral politics is inherently short-term, so in terms of recommendations for Biden and company, that may be the more relevant measure.
A bit unfair to comment here on Barro, but since I can't do it there w/o paying, here goes:
I basically agree witheverytning except that student debt forgiveness is inflationary. Ceteris paribus it increases the deficit and that sucks a few more resources from investment into consumption and THAT is a reason to oppose forgiveness. But if the Fed has an inflation target as it apparently does, the deficit implications of forgiveness or non-forgiveness is just one more or less thing it need to consider in setting the values of its policy instruments to achieve its inflation objectives. In other words it is NOT inflationary, it means higher interest rates.
I am very much not an Econ Guy, but I think the counter to that is probably a matter of time lags. That is, loan forgiveness is going to drive spending right now, while Fed rate hikes push inflation down over a longer term. So it could be short-term inflationary but a wash in the long term. But electoral politics is inherently short-term, so in terms of recommendations for Biden and company, that may be the more relevant measure.
For practical matters, I don't much disagree. But I think Barro should have been more rigorous.