The Center for Research on the Wisconsin Economy hosted Professor John Taylor Thursday night to as a keynote speaker to discuss the current state of the Wisconsin economy.

Taylor is a Mary and Robert Raymond Professor of Economics at Stanford University and George P. Shultz Senior Fellow in Economics at the Hoover Institution. He is also frequently mentioned as a candidate to serve as the next Chair of the Federal Reserve Board, according to the Washington Post.

Taylor began his lecture by emphasizing the importance of the state economy. The source of a good state economy, he said, is policy.

He noted his previous experience in state economies through his work with multiple Board of State Economic Advisors in California.

“People in the state know what’s going on better than the people in Washington or the federal government,” Taylor said.

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In Wisconsin specifically, Taylor brought up the subsidies given to Foxconn by the state. These subsidies were good for the state economy because they make Wisconsin seem more “attractive” to potential companies.

It’s necessary to create an attractive economic atmosphere to draw more strong companies to the state that will stimulate the economy, Taylor said.

“This competition between the states is for a better economic policy,” Taylor said.

The impact of policies on state economies is based heavily on the financial assistance a state is receiving from the federal government, Taylor said.

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For example, during the 2008 recession, states were given grants to spend on projects such as bridges and roads, Taylor said. Like individual consumers, however, states instead saved the money which made the grants ineffective.

States then borrowed less from the federal government during the recession, Taylor said.

“In a way the states were operating as consumers,” Taylor said. “They had this influx of money and they didn’t have projects ready to go so they pocketed the money.”

In the future, Taylor suggests the government to put more requirements on state grants so they spend the money in the way it was intended.

The status of the economy and policies made at both the federal and the state level are intertwined, Taylor said.

“We can do a lot better in our economics if we have better economic policy,” Taylor said.