Janet Yellen On Problems of Fiscal Drag

At Janet Yellen’s confirmation hearings, Senator Warner asked a question about the impact of fiscal drag on the economy.  The question is a good one, and Yellen’s answer is also very good.

Yellen explains a little bit about the size of the fiscal drag, the need for the Fed to try to offset it. She does mention that the Fed’s tools for offsetting fiscal drag are not the most effective.

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