Business Roundtable Perspectives: No. 479, July 2011
How to Get That AAA Rating Back
By Robert J Barro
8 August 2011
Ronald Reagan and Barack Obama have at least one similarity. They both were confronted by great economic challenges when
they became president.
Mr Reagan's immediate challenge was that inflation and interest rates were out of control. He met this great test by
allying with the Federal Reserve chairman, Paul Volcker, in accomplishing a return to price stability, even through the
1982 recession when the unemployment rate hit 10.8%.
Reagan's success is not in doubt. Inflation and interest rates were reduced dramatically, and the recovery from the end
of 1982 to the end of 1988 was strong and long with an average growth rate of real GDP of 4.6% per year. Moreover,
Reagan focused on implementing good economic policies, not on blaming his incompetent predecessor for the terrible
economy he had inherited.
This article was published by The Wall Street Journal on 8 August 2011.
Articles in the Perspectives series plus a large library of books, studies, speeches, articles and DVDs on a wide range
of public policy issues can be found at www.nzbr.org.nz
Related studies and commentary:
The Superannuation Age: Breaking the Impasse
An article published by the Dominion Post
27 June 2011
By Roger Kerr
Can’t Cut Spending? Look Around the Globe
An article published by the New York Times
16 April 2011
By Tyler Cowen
Halt the Middle Class Money-Go-Round
An article first published by The Telegraph
14 October 2010
By Patrick Nolan
Reaganomics vs Obamanomics
An article first published by the Wall Street Journal
11 February 2009
By Peter Ferrara
The Case for a Flat Tax
A report published by the New Zealand Business Roundtable
December 2004
By Richard A Epstein
*************