From the just-released Kauffman Economic Outlook, authored by Tim Kane, an indicator of what some economists thought the ARRA accomplished, in terms of unemployment.
n=76.
From the commentary:
Over a year has passed since the
controversial “stimulus” bill became
law. A solid majority of economics
bloggers (62 percent) believes
that the stimulus helped fight
unemployment. One-fifth of the panel
thinks the U.S. rate of unemployment
would be more than 2 percent higher
without the law, and another twofifths
think it would be 0-2 percent
higher. Many believe the law had no
effect on unemployment (19 percent),
and nearly as many (17 percent)
think the stimulus actually raised
unemployment above what it would
have been today absent the law.
From the notes on the methodology:
Invitations were sent to more than 200 top economic bloggers, most of whom were on
the Palgrave’s Econolog.net December 2009 rankings (its methodology is described at
http://econolog.net/stats.php). Some blogs with multiple authors have more than one
respondent in the panel. For example, both James Hamilton and Menzie Chinn, co-bloggers
at EconBrowser.com, participated, as did Tyler Cowen and Alex Tabarrok, co-bloggers at
Marginalrevolution.com. The panel includes a total of seventy-six respondents.
From CBO’s August assessment of ARRA::
Looking at recorded spending to date as well as estimates of the other effects of ARRA on spending and revenues, CBO has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies on the economy and using various mathematical models that represent the workings of the economy. On that basis, CBO estimates that in the second quarter of calendar year 2010, ARRA’s policies:
- Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent,
- Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points,
- Increased the number of people employed by between 1.4 million and 3.3 million, and
- Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 4.8 million compared with what those amounts would have been otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)
One differing opinion on the effectiveness of the stimulus package, discussed here. See also this discussion of the unemployment impact.
Update 10/31/2010 10:20pm Pacific In response to reader tim kemper‘s assertion that income tax receipts rose in response to the passage of the 2001 tax cuts (aka EGTRRA), here is the NIPA data.
Figure 2: Sum of Federal personal income tax and corporate income tax, in billions of dollars, SAAR (blue, right axis), and as a proportion of GDP (red, right axis). Source: BEA, GDP 2010Q2 3rd release (lines 3, 7 of Table 3.2), and author’s calculations.
It would be interesting to see what percentage of those who thought it had no impact are conservatives. And vice versa.
I bet most of those who thought it had no impact were conservatives.
Interesting to notice the Ariadne s thread from one Econbrowser post to the other.In summary,the panel of strong convictions is stating:
Political representation is prone to receive an F
Government is too involved in the economy
As a matter of facts governments have wrongly planed throughout the last decade.The private sector may as well think “you broke it and you own it”
I saw the links at bottom to the UI discussion, etc. but don’t you wish the questioning had honed in on the 3 basic components of the stimulus act? This being election season, I have been in dozens of conversations about the stimulus. The gist is often that the “spending didn’t work.” Very few people know the “spending” was almost 40% tax cuts and 30% transfer payments like UI, with actual spending being the remaining 30%. It’s genuinely weird to hear people tell me that we need to cut taxes given they’re also arguing the stimulus bill failed and it was one of the largest tax cuts in US history. They also complain about the deficit, but then say that tax cuts are different … and they’re generally in favor of UI extensions and the like for human reasons. So they take a relatively small number of $275B, which is the actual spending, mostly on infrastructure, and inflate that in their heads to $775B or $882B or round to $1T. The actual spending component is little more than two to three really big highway bills crammed into a single year.
So when I read opinion surveys about ARRA, I wonder if they’ve bothered to think about the components because the argument against is essentially an argument that tax cuts don’t work.
IIRC, and I don’t remember where I read this, but I have been lead to believe that the ARRA stimulus ‘saved’ a great many jobs in the state and local government categories. This of course due to a large portion of the funds being spent through state government channels. And, considering our circumstances, this makes good sense.
But… ARRA has therefore had the same misleading effect that TARP has left behind. In each case, so called ‘skilled workers’ have been artificially supported while the so called ‘unskilled workers’ have received far less support. Which, is rather odd considering that skilled workers do not need assistance nearly so much as what their less affluent fellow citizens do. Naturally, while ARRA funds were disproportionately channeled to the public sector employees, TARP funds were even more-so unevenly directed to the financial services sector. Yet our technocrats would have us believe that the demand for unskilled-workers is weak in relation to the artificially supported demand for skilled-workers.
Considering though just how interdependent these primary beneficiaries have become, the technocrats/bureaucrats/plutocrats, and how the concentration of power has reached a tyrannical level of corporatism, the devious use of counter-cyclical spending should come as no surprise, and it is fitting and telling that each political party is culpable.
At a deeper level I suppose that this particular deceit ties back to The Theory of Marginal Utility. A thug who knows how to launder money, a person who for example abducts children and sells them as sex-slaves, theoretically, he makes a greater contribution to the economy than all of those citizens who earn less money than this thug. It is of course unlikely that stimulus funds made their way into the coffers of these particular ‘entrepreneurs’, but in terms of the amount of harm done to society there are some financiers and bankers who are similarly detrimental. There are also some incompetent, lazy, and generally useless government employees who along with large numbers of parasitic FIRE sector employees have in fact been given vastly too much credit in regards to their contributory value.
Where all of this gets even more delusional is when the other forms of stimulus are considered (ultra low interest rates and QE). Demand for the types of loans that might help to create jobs is well short of the supply of cheap capital and yet, ironically, the finance ministers of emerging nations are having to impose capital controls to protect against carry-trades from US based investors. These capital controls are essentially like signs that read: US INVESTORS NOT WELCOME, and yet another indication that the US economy has become far too dependent on growth derived from investment ploys.
But over these past several days, as part of the chatter about the ‘currency war’, nothing was said in the MSM about our glaringly obvious economic dependence on our financial services sector. The very sector that employs the second largest number of our ‘skilled workers’, the other being, of course, our ‘public sector’. Which would make these two sectors the logical leading recipients of stimulus funds if the funds were intended to achieve something other than job creation, if for instance the purpose of the combined stimulus expenditures were intended to increase global market-share, while also maintaining the consolidation of power, which is what fits logically. But the logic that supports the notion that the demand for ‘skilled workers’ is sustainable, while the demand for ‘unskilled workers’ is shown to be weak, based on the unemployment statistics, well, that is only logical in a delusional or a deceitful sense.
Ray L-Love
Menzie: as I continue to say, you and CBO were so wrong about the “stimulative effects” of the spending. Using 2.5% as the effect on the economy, it gives you 350B per year of increased GDP. For 2 years that is 700B. We spend almost 1T for 700B of increase in output. As said many times, less than 1.0 multiplier. I think your spreadsheets are like those of CMBS analysts, never goes down. Bye bye keynes.
tim kemper: Gee, aren’t you the same person who said “As the 2001 act and 2003 act actually increased revenues, ….”? Indeed, you were. I thank you for providing all these howlers to keep me laughing for days on end. Please keep it up.
Oh, by the way, the total stimulus package was $868 billion. A large chunk of those were tax provisions — for which the Keynesian (or as you spelled it on 8/7/10, “kensian”) economics would say would likely be less than unity. You really should read a textbook — any textbook, even Barro’s — before you embarrass yourself further.
uh, menzie, it did increase revenues. Look here http://www.fms.treas.gov/mts/index.html.
The CBO (as well as yours) said the transfer payments would have 1.5 multiplier. Care to rethink that?
tim kemper: Your statement indicates that you are not in full command of the data. The link you provided gives total receipts including FICA and every other revenue the government receives (and in addition is not seasonally adjusted — you could see anything!). See the new Figure 2 in the post for income tax receipts (personal and corporate), in absolute nominal dollars, and expressed as a proportion of nominal GDP; the effective date of EGTRRA is shown as the vertical black line.
So…now I’m laughing even more. Thanks!