President-elect Barack Obama today announced more details of the economic team that will be advising the new president. I find these quite encouraging.
Category Archives: deficits
Pocketful of Multipliers (II): Options for Stimulus Packages
As the debate over the nature and size of a stimulus package wends its way through the Congress [0], [1], [2], I thought it would be useful to bring numbers into the debate, especially as we are considering fiscal stimulus in a time when the Bush Administration has constrained, by dint of previous profligacy, our options. In particular, I want to return to the issue of multipliers, discussed in nearly a year ago. Here, I want to provide a little more specificity, regarding the impact depending upon the type of outlays.
Brief questions and answers on the fiscal stimulus
No time to post much today, so I’ll just pass along an interesting question and brief answer from the Econbrowser mail room.
The Budget Deficit…and Macro Policies Going Forward
Let’s assume the Treasury, the Fed and the rest of the community of international financial policymakers are able to stabilize the financial system. What are the fiscal options available, given the borrowing and spending policies of the Bush Administration?
From Chowdhury and Huie, “Skyrocketing Issuance,” US Economics/Strategy Weekly (Deutsche Bank, 10 Oct.) (not online):
Treasury issuance is likely to increase to extraordinary
levels over the past year. There are 3 components to the
issuance picture. The first is the traditional federal budget,
which in fiscal year 2009 is likely to increase substantially
from the 2008 deficit of around $440 bn. The second are
the various Treasury rescue initiatives that involve buying
assets or equities; only the expected net cost will be
formally recorded on the budget, but the entire gross
spending amount will be added to the issuance
requirement. Finally, the Federal Reserve’s liquidity
facilities will also add to issuance, as the Fed no longer
has capacity to sell or lend the Treasuries in its portfolio;
instead, going forward it will rely on the Supplementary
Financing Program, where the Treasury issues bills and
deposits the proceeds at the Fed, to finance its lending
facilities. In total, we expect net issuance to rise to $3.3 tn
over the fiscal year.
Ex-oil Deficit Shrinks, but Exports Slow
Messages from the August Trade Release and the September Import/Export Price release.
Detroit gets in on the action
With all the excitement in financial markets, I almost missed this story on the bailout for automakers.
Paulson bailout
Let me begin with the point on which I am in complete agreement with Treasury Secretary Henry Paulson and Federal Reserve Chair Ben Bernanke– it is hard to overstate just how scary this week’s developments in financial markets could be.
Trade Deficit Reduction via Changes in Exports, Imports or Prices
Today’s July trade release was a little bit of a surprise, due to oil [0]; Haver covers the numbers. Calculated Risk discussed the release, and actually took the outcome as a fairly positive, albeit with some anxiety about whether exports will keep up the robust growth necessary to continue shrinking the deficit.
I want to focus on a couple of other aspects of the release which seem to make me worry a bit more.
Corporate tax policy, budget deficits and the capital stock in a neoclassical model of investment
Or, What would be the net effect on investment of the McCain tax plan?
Extending JGTRRA and EGTRRA under the CBO’s March 2008 Baseline
There are many moving parts to McCain’s budget policy (see McCain site on the economy, [0]), so I can only undertake a partial analysis. That being said, extension of JGTRRA and EGTRRA is the most concrete, and easy to score, component, exactly because the CBO has already done it.
Figure 1 depicts the impact of making permanent the Bush tax cuts of 2001 and 2003, relative to the March 2008 CBO baseline.