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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (624130)	8/12/2011 11:57:24 PM
From: TimF	Respond to of 1576328

Adding on to that - If everyone agreed that the stimulus was about what the CBO assumes it is, the assumption wouldn't be a huge deal. Their study still wouldn't show that it is about that level, but they would just be plugging in a uncontroversial, near universal assumption, and seeing where that leads us. The problem is estimates of the multiplier effect of stimulus spending in general and of the Obama stimulus efforts in particular, are all over the map. ------------ ...Many of us have said it before, but it’s worth repeating: Both studies are based on the same faulty models that predicted that the stimulus of 2009 would stimulate economic growth. This theory assumes that $1 in government spending triggers well above $1 in economic growth and creates many jobs. The Goldman Sachs study goes even further: Its estimate seems to imply a multiplier effect greater than 3, well above anything in recent literature. A review of the literature about the value of the multiplier reveals that in most cases, a dollar in government spending produces less than a dollar in economic growth — and these findings often ignore the impact of paying for this government dollar by increasing taxes. Harvard University’s Robert Barro finds a multiplier between 0.4 and 0.7; at Stanford, John Taylor and John Cogan find that the stimulus package couldn’t have had a multiplier much greater than zero. Even the multipliers used by Christina Romer and Jared Bernstein in their January 2009 paper “The Job Impact of the American Recovery and Reinvestment Plan” ranged from 1.05 to 1.55 for the output effect of government purchases. More recently, Dartmouth economists James Feyrer and Bruce Sacerdote acknowledged that the stimulus didn’t boost the economy nearly as much as the administration models claimed that it would. These are only some of the many studies on the issues... nationalreview.com You have estimates from negative to over 3. Deciding which of these is correct is not an issue where the CBO, or really anyone, can be considered a competent authority.