Possible Insight

Stimulus Is a Bust: I Want My Money Back

with 2 comments

Ever since he taught my Econ 1 class, I’ve liked John Taylor.  He always struck me as a practical guy, especially for a macroeconomist. So I was not surprised at what I found when I followed Arnold Kling link to Taylor’s analysis of the stimulus.  Using Department of Commerce data, he calculates that a whopping 0.3% points of the 5.7% point recovery of GDP growth from the first to second quarter is attributable to the stimulus. Of all the positive impacts, private investment accounted for 75% of the total recovery.

So perhaps we could take back the $291B in stimulus money that hasn’t been spent yet.  Probably the single easiest way to reduce the deficit.


Written by Kevin

October 26, 2009 at 10:21 am

Posted in Economics

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2 Responses

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  1. I think it’s possible that the subject line is an oxymoron. Stimulus may have had the indirect, confidence-boosting result we needed, AND we should get the rest of the money back now that we are out of the woods 🙂

    Rafe Furst

    October 26, 2009 at 5:25 pm

    • If you believe that, then any well publicized, confidently delivered stimulus would work. There are much better ways of doing that than random spending programs–at least from the perspective of avoiding useless make-work and crony capitalism. A payroll tax hiatus for example.


      October 29, 2009 at 10:15 pm

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