Kash and PGL at Angry Bear have a couple of recent posts challenging the proposition that reducing the rate at which income from capital is taxed will increase growth rates. I disagree with their conclusions, but I’m more intrigued by the fact that they – along with Menzie Chinn at Econbrowser and the Congressional Budget Office (pdf file) – think it’s worth looking at cross-country comparisons in order to address the question of whether or not the US should lower corporate tax rates. There was a time when US policy analysts would have been singularly disinterested in Irish tax policy.

And there was also a time when US policy makers didn’t really pay much attention to USD exchange rates either, but that era is also over. John Snow is not in a position to repeat what John Connally told his European counterparts in the early 1970’s: "The dollar is our currency, but it’s your problem."

It’s probably still the case that for policy purposes, it’s not a bad approximation to use a closed-economy framework to model the US economy. But for how long?