Remember when critics wailed about the high cost/per job saved and low multipliers likely under the American Recovery and Reinvestment Act? The same set of people do not seem very bothered at all by the relatively small implied output impact of the TCJA produced by any of the reasonable modelers.
Category Archives: multipliers
Asymmetries in Fiscal Policy, Again
One of the most interesting papers presented at the Jackson Hole conference was written by Alan Auerbach and Yuriy Gorodnichenko, entitled Fiscal Stimulus and Fiscal Sustainability.
Helicopter money
Despite aggressive actions by central banks, many of the world’s economies are still stagnating and facing new shocks, leading to renewed calls for helicopter money as a serious policy prescription for countries like Japan and the U.K.. And, if things go badly, maybe the United States?
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Implied Output Response to Demand Side Shifts in the Friedman Scenario under Local to Potential Assumptions
What does a conventional (estimated) macroeconometric model imply for a sustained 7.7% increase in government consumption and investment as a share of GDP in terms of output.
Assessing the Counter-cyclical Macro Policies of the Great Recession
There are at least two ways of proceeding. One could repeat the following mantra endlessly:
[T]he government taxes or borrows the resources used to build infrastructure projects. Government spending crowds resources out from the rest of the economy. More federal spending comes at the expense of a smaller private sector.
These factors explain why the 2009 stimulus failed. So did Japan’s decade-long attempt to stimulate its economy through infrastructure projects. The Japanese wound up with massive debt, superhighways in underpopulated rural districts—and an anemic economy.
Keynesian Cassandras? The Sequester Re-Assessed
Professor Tyler Cowen’s anti-Keynesian manifesto has been ably discussed by Professor Simon Wren-Lewis at Mainly Macro. I thought what merited additional attention is Professor Cowen’s first assertion:
1. Keynesians predicted disaster following the American fiscal sequester, and the pace of the recovery accelerated.
Expansionary Fiscal Policy Is Very Expansionary, during Extreme Recessions
From a paper by Carlos Vegh, (John Hopkins University), Daniel Riera-Crichton (Bates College) and Guillermo Vuletin (Brookings Institution) presented at the USC-JIMF conference “Financial Crisis in the Aftermath of Global Crisis” (described here):
“Fiscal Policy Re-Assessed”
From an article in the La Follette Policy Review:
In 2010 as the Great Recession was releasing its grip on the world’s economy, the United Kingdom’s newly elected Conservative-Liberal government embarked upon a policy of fiscal consolidation—higher taxes and drastically reduced spending—with the aim of stabilizing the ratio of government debt to gross domestic product (GDP) while spurring economic growth….
Interpreting the Great Recession in a Classical Framework
If a collapse in aggregate demand is not at fault, then was an aggregate supply shift? A quick-and-dirty evaluation using some back-of-the-envelope calculations
Birthers, (Stimulus) Deniers, and Economic Myths
OK, nothing about birthers, but some comments on truths held deeply, but unjustifiably, by certain types of people.