How Good is Larry Summers' Judgment?
By David Henderson
Many economists, including me, think that Larry Summers is quite bright. But how good is his judgment? In my most recent Forbes.com article, “Larry Summers’ Judgment,” I address this issue. I highlight two things:
1. His 1982 prediction, co-authored with Paul Krugman, that the inflation rate would rise by five percentage points. It actually rose by no more than 1.5 percentage points.
2. His supporting in 1992, when the unemployment rate was 7.4 percent, a major cut in the U.S. budget deficit versus his support now, when the unemployment rate is 6.5 percent, for a substantial increase in the budget deficit.