More stimulus measures and drivers for investment are needed if the economy is to avoid the fate of Japan in the 1990s, Nobel laureate and professor of economics at Princeton University Paul Krugman told CNBC Monday.
“Right now I think the world as a whole kind of looks like Japan in the early 90s. Not a catastrophe, but we really don’t know how we get serious growth going,” Krugman said. “Actually the slump globally has been much worse than anything Japan had during that lost decade,” he added.
Krugman also said that more stimulus money is key for a sustainable recovery. “We really should have a second stimulus, we should have more stuff,” he said, dismissing fears of inflation as overdone. There is nothing in there that would be inflationary,” Krugman added. “You have to understand that putting money in the system, it mostly just sits there. It’s quite easy to pull it out again if inflation starts to loom.”
