“Last week, I briefly discussed the geographic distribution of Recovery Act funds. The figure shows the relationship between per capita Recovery Act grants awarded and unemployment across states, which shows that stimulus aid was not particularly well matched with need…On average, for every extra percentage point of the labor force that is unemployed, a […]
Archive for the 'Fiscal Stimulus' Category
Feb18th2010
Fiscal Stimulus And Hypocrisy
Published by in Economics, Fiscal Stimulus and ModernPolitics. 1 CommentMany Democrats, including Obama, have criticized Republicans for both opposing the Stimulus bill and helping to direct some of that stimulus money to their districts. They claim its hypocrisy. Greg Mankiw argues otherwise:
It seems perfectly reasonable to believe (1) that increasing government spending is not the best way to promote economic growth in a depressed […]
Nov30th2009
More On Tax Cuts Vs Fiscal Stimulus
Published by in Economics, Fiscal Stimulus, ModernPolitics and Taxes. 0 CommentsFrom Harvard’s Alberto Alesina and Silvia Ardagna:
Large changes in fiscal policy: taxes versus spending
We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase […]
Oct5th2009
“It seems to me that there are two ways of thinking about how monetary policy would react to fiscal stimulus. One approach would be to ask: “What is the optimal Fed response to fiscal stimulus?” And the answer to that question is rather obvious; the Fed should act in such a way as to completely […]
Sep24th2009
Tax Cuts Vs Fiscal Stimulus
Published by in Economics, Fiscal Stimulus, ModernPolitics and Taxes. 6 CommentsEven more proof that tax cuts are better at stimulating the economy than fiscal stimulus. Bruce Bartlett describes the recent research by Harvard economist Robert Barro:
Harvard economist Robert Barro is out with a new paper that undoubtedly will get a lot of attention from conservatives. First, he finds that the multiplier effect from government purchases is well […]
Sep21st2009
According to recent economic data, zero:
Once you allow for a significant role of forward-looking behaviour by households and firms, there is no multiplier. The expectation of future tax increases, or rising government debt and future interest rate increases leads to a reduction in private consumption and investment spending. This holds in particular for the three […]
Jul27th2009
Limited Governments Best Friend: The CBO
Published by in (modern day) Liberalism, Economics, Fiscal Stimulus, General, HealthCare, ModernPolitics and Personal. 2 CommentsRemember the Democrats claim that by empowering a new panel (the Independent Medicare Advisory Council) to recommend future spending reductions we could save several billions of dollars in healthcare costs? If this was before the creation of the CBO (1974, according to Wiki), such claims would be nearly impossible to disprove. Democrats could get away […]
Jun11th2009
“How is a $118 billion structural deficit, $35 billion in Medicare Part D, and a theoretical end to the Iraq presence forcing Barack Obama to spend nearly $1 trillion in 2018? How is it forcing him to spend roughly $650 trillion more than he takes in in 2012?…The problem with the budget deficit is that, […]
May29th2009
More On The Problems With The Stimulus
Published by in Economics, Fiscal Stimulus and ModernPolitics. 0 CommentsEconomist Arnold Kling reports:
Greg Mankiw reports that the yield curve is steep, meaning that long-term interest rates have risen. In my view, this is perfectly rational, and it shows that the short-run effect of the fiscal stimulus is negative, as Jeff Sachs predicted.
This is all based on a Keynesian type of macro analysis. As we […]
May21st2009
“Today’s decision by the S&P rating agency to place the United Kingdom government’s AAA rating on negative watch should be a wake up call to the Obama administration about the dangers of fiscal profligacy. So too should the Chinese government’s repeated comments about its reluctance to keep adding to its already extraordinarily large U.S. Treasury […]
Apr28th2009
Is Government Spending As Good As Anybody Else’s?
Published by in Economics, Fiscal Stimulus and General. 0 CommentsSpecifically, at creating employment? Many liberal economists, including UC Berkeley’s Brad DeLong, say yes. For the counter argument, see this post by Mario Rizzo, professor of economics at NYU.
He writes:
So when DeLong, among others, says that government spending is as good as private in restoring employment, he is speaking against the whole thrust of the […]
