View Single Post
  #28 (permalink)  
Old 10-14-2008
White Rabbit's Avatar
White Rabbit White Rabbit is offline
Secretary of Defense
Déjà vu

 
Member Since: Jul 2007
Location: Go Ask Alice
Posts: 2,015

   
Re: In A Crashing Economy Which Government Spending Is Most Important?

Quote:
Originally Posted by John Drake View Post
So, as far as I can tell the increase to GDP is pretty much the figure after the 1 as a percentage, is that right?
That would be correct.

A $1 government tax expenditure of a "Non-refundable lump sum tax rebate" (item#1 in table) would produce a net gain of $1.02 in GDP after 12 months. That would be a net 2% gain (based on the dollar inputs, not the overall change in GDP).

So if the US government wants to mitigate the economic damage from a recession, the best way to do it is with a temporary increase in Food Stamps program and extention of UI benefits.

Backstopping the States is also a good policy since the States tend to roll back spending pretty drastically during a downturn and that just tends to make things worse.

Accellerated infrastructure spending isn't a bad policy, but usually takes too long and way too susceptible to porkbarrel games (meaning such spending may not end up being targeted to the regions that need it most).
Reply With Quote