{"id":381517,"date":"2010-03-02T15:50:16","date_gmt":"2010-03-02T20:50:16","guid":{"rendered":"http:\/\/www.theatlantic.com\/business\/archive\/2010\/03\/judging-the-stimulus\/36922\/?rss=36922"},"modified":"2010-03-02T15:50:16","modified_gmt":"2010-03-02T20:50:16","slug":"judging-the-stimulus","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/381517","title":{"rendered":"Judging the Stimulus"},"content":{"rendered":"

Robert Barro is unimpressed with the fiscal stimulus<\/a>. He says an extra $600 billion of public spending at the cost of $900 billion in private spending was not a good deal.<\/p>\n

\n

The path of incremental government outlays over the five
\nyears in billions of dollars is +300, +300, 0, 0, 0, which adds up to
\n+600. The path for GDP is +120, +180, +60, minus 330, minus 330, adding
\nup to minus 300. GDP falls overall because the famous “balanced-budget
\nmultiplier”–the response of GDP when government spending and taxes rise
\ntogether–is negative. This result accords with the familiar pattern
\nwhereby countries with larger public sectors tend to grow slower over
\nthe long term.<\/p>\n

The projected effect on other parts of GDP (consumer expenditure,
\nprivate investment, net exports) is minus 180, minus 120, +60, minus
\n330, minus 330, which adds up to minus 900. Thus, viewed over five
\nyears, the fiscal stimulus package is a way to get an extra $600
\nbillion of public spending at the cost of $900 billion in private
\nexpenditure. This is a bad deal.<\/p>\n<\/blockquote>\n

See Gary Burtless’s response on National Journal’s economic experts blog<\/a>.<\/p>\n

\n

I am puzzled by his Wall Street Journal analysis, which
\nseems to treat the stimulus package as though it consists solely of an
\nincrease in government spending. In fact, at least 45% of the stimulus
\nin 2009 and 2010 consists of tax reductions rather than spending
\nincreases. Moreover, as I have argued elsewhere, the part of the
\nstimulus package that has provided fiscal relief to state governments
\nhas resulted in reductions in state taxes below where they would have
\nbeen without the stimulus Thus, more than half of the stimulus package
\nconsists of tax reductions rather than government spending increases.
\nIt is very hard for me to believe that these tax reductions have failed
\nto spur an increase in household consumption, contrary to Barro’s
\napparent view that personal consumption has declined as a result of the
\nstimulus.<\/p>\n<\/blockquote>\n



\n

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Robert Barro is unimpressed with the fiscal stimulus. He says an extra $600 billion of public spending at the cost of $900 billion in private spending was not a good deal. The path of incremental government outlays over the five years in billions of dollars is +300, +300, 0, 0, 0, which adds up to […]<\/p>\n","protected":false},"author":5958,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-381517","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/381517","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/5958"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=381517"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/381517\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=381517"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=381517"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=381517"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}