Quote:
Originally Posted by John Drake
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?
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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).