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  • August 2011
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links for 2011-08-12

  • Quote:"The Obama administration has argued that it's unfair to count construction jobs in any one county because workers travel between counties for jobs. So, the AP looked at a much larger universe: The more than 700 counties that got the most stimulus money per capita for road construction, and the more than 700 counties that received no money at all.

    For its analysis, the AP reviewed Transportation Department data on more than $21 billion in stimulus projects in every state and Washington, as well as the Labor Department's monthly unemployment data. Working with economists and statisticians, the AP performed statistical tests to gauge the effect of transportation spending on employment activity.

    There was no difference in unemployment trends between the group of counties that received the most stimulus money and the group that received none, the analysis found.

    //D'oh. Regardless of any effect on GDP the liberals hope is there, the stimulus had no effect on employment.

  • Quote:(Holtz-Eakin)"The best answer is no. The very call for another "stimulus" reflects a fundamental misconception that the economy can be managed — and the unemployment rate targeted — for political objectives. Throughout the 1960s and 1970s this was tried to no avail; indeed, it bred only poor growth and high inflation.

    The hallmark of the current downturn has been asset market collapses — housing, securitized lending and stocks. Households will turn to the task of rebuilding their nest eggs, not powering a sustained spending boom. No amount of Keynesian "stimulus" will replace roughly $12 trillion in lost wealth and lead to a sustained consumer recovery.

    // If the liberal critics of Eakin are correct, than it should be easy to get back that 12 trillion dollars. All the government needs to do is spend about 6 trillion dollars in additional stimulus, on top of the current budget, and then we're back to normal.

    I don't think so.

  • // Blog post links to many different opinions regarding the stimulus and whether another stimulus should be in the works. I would say there might have been a small positive effect from the stimulus, like giving a dying man a shot of adrenalin to wake him up, but government stimulus is not the path to sustained healthy economic growth. We find, when we correlate Gov't spending as a % of GDP to GDP growth, we get a strong negative correlation for any gov't spending over 10% of GDP. And remember, over the last ten years, the US has averaged just about 1.6% GDP growth. If you take the Keynesian multiplier seriously, the trillions of dollars the government borrowed by running a deficit is entirely responsible for all of our economic growth, and that the private sector has been shrinking (i.e. dying) for ten years. And that, to me, is prima facie untrue.
  • Quote:"Holtz-Eakin argued that the dollar value difference between what would have happened to U.S. gross domestic product without the stimulus spending and what did happen was almost exactly equal to the cost of the stimulus itself—meaning the stimulus did not stimulate.

    […] But guess what? Even Holtz-Eakin, using this same methodology, would be forced to admit that the Recovery Act did have larger ripple effects.

    // No, that's not what Eakin said at all, and this guy even quoted Eakin when he said " Thus, if one attributes all improvement in GDP to the stimulus—no role for the Fed, no role for mortgage relief programs, no role for worldwide economic improvement—then stimulus essentially broke even and provided no multiplier effects." Thus Eakin did not say everything in his graph was attributable to the stimulus. The extra $500+billion might have been the stimulus, or the improvement in the world economy, or any of several macroeconomic factors.

  • Quote:"Was it a mistake to shoehorn Obama's longer-range economic plans into a package intended to jump-start the economy? If that money had been applied to more traditional stimulus, with shorter-term impact, would more people have jobs? Would economists be less concerned about the potential for a double-dip recession?

    After talking to five economists, I can give you the bottom line: Spending the money differently probably wouldn't have changed our circumstances much. But the economists took diverse paths to that conclusion, and they have varying opinions about where to go from here.

    // Interesting read. It has to be remembered that any analysis of the stimulus is post hoc, thus we can't be certain of causality. The basic Austrian critique here is that the economy is far too complex to be properly understood, even in hindsight.

  • Quote:"Conservative economist Douglas Holtz-Eakin has a chart he's fond of that demonstrates just how ineffective the 2009 stimulus was. Basically, it shows that the stimulus cost $260 billion and produced only an extra $268 billion in GDP. Personally, I'd take even that, but his point is that the stimulus produced no Keynesian multiplier effect at all. It was just a 1:1 replacement of revenue from one source to another.

    But as you may recall, the BEA recently revised its GDP estimates from late '08 and '09, and it turns out the economy was doing much worse than we thought. And if you don't recall this, Michael Linden wants to remind you about it today. […] Because it turns out that when you redo Holtz-Eakins' favorite chart using the corrected data, it suggests that the stimulus bill produced about $544 billion in extra GDP. In other words, a multipler effect of about 2x.

    // Not enough space here, but please look at today's other bookmarks for my thoughts.

  • // Most of the day's bookmarks revolve around Douglas Holtz-Eakin's analysis of the stimulus and what effects it had on the economy. So, in context, here is what Eakin says about this:

    "The chart below shows actual GDP in '09. It also shows what would have happened if the trajectory at the start of '09 had continued the entire year (“Continued Decline”) – i.e. the graphical version of “the economy was falling off a cliff.” The shaded area is the difference – the additional GDP from not continuing to decline – and totals $268b.

    Stimulus tax cuts and spending in '09 were roughly $260 b. If one attributes all improvement in GDP to the stimulus, no role for the Fed, mortgage relief programs, worldwide economic improvement – then the stimulus broke even and provided no multiplier effects. These assumptions may be too pessimistic. Using the same logic, if the economy had been flat in '09, stimulus would be responsible for $63b in additional GDP, a payoff of .25 cents on the dollar."

  • // The FBI thinks people who store up a lot of non-perishable foods (i.e. Mormons) are potential domestic terrorists. And they're asking retailers who supply these things to report suspicious people (i.e. Mormons). Sounds like a dead-end to me.
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