Tuesday, March 10, 2009

'Lotsa Jobs Now'? Maybe. But It Gets Worse!

Some fairly technical stuff here, but the gist is this:

There are "old" Keynesian and "new" Keynesian economic multiplier studies. The old ones were used by the Obama bunch to cook up their '3 million jobs' number. The new ones are markedly different in projections.

There is one area of agreement: there IS an immediate multiplier efffect. The difference, however, is in the longer-term, where the "new" models project diminishing returns (down to zero)--largely because of the capital-drain caused by Treasury borrowing.

The conclusion from the "new" Keynesian modelers?

They [the Obama bunch] report impacts on GDP for a broad fiscal package that are six times larger than those implied by government spending multipliers in a typical new Keynesian model and our calculations based on generous assumptions of the impacts of tax rebates and transfers on GDP. They also report job estimates that are six times larger than these alternative models, and the impacts on private sector jobs are likely to be at variance with the alternative models by an even larger amount. At the least, our findings raise serious doubts about the robustness of the models and the approach currently used for practical fiscal policy evaluation.

Kinda fits my personal theory that the combined effect of taxes and regulations in the US has made serious economic growth almost impossible in the last 20 years or so.

You may disagree, and cite the growth in GDP during Clinton and (weakly) Bush years. But then you'll have to explain away "Easy Al"'s extremely generous monetary policy and its effects on "growth."

IOW, I think a lot of that "growth" was foofoodust--like the 'forever rising' values of housing...

HT: RedState

1 comment:

Billiam said...

If the growth numbers are scammed the way the unemployment numbers, and the budget numbers are, they are off by at least double.