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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (16781)	10/16/1998 2:09:00 PM
From: Zeev Hed	Respond to of 18056

He has interest rates to play with and the money printing machine at his disposal as well. Since we are not in a liquidity trap in this country, these could very well be enough (but I would need his econometric models see if the infusion of additional interest sensitive demand, such as housing and cars could outweigh the expected decline in corporate capital spending and weak exports, if these are indeed the factors he is looking at). From an econometric point of view, there is also a need to balance the impact of the budget surplus (a budget surplus has a tendency to reduce economic activity since more money is taken out of the economy by the Government then it put in). As long as growth in non government sectors is larger then the "relative" contraction in government spending, it is fine top have such surpluses, but when surpluses become too big, watch out. Zeev