Did the stimulus work? A review of the nine best studies on the subject

[Sundial]

All I can say is wow...You really think that we could have full employment if we just borrowed enough money to pay for it? Did you just sleep through the whole credit downgrade thing? We could all live in mansions, drive exotic cars and date super models if we'd just commit to a deficit sufficient to reach THOSE goals as well. Are you really this stupid? You progressives live in an alternate universe where credit cards never have to be paid off and the bank never cuts off your line of credit. It would be laughable except some of you clowns are actually running our freakin' country right now. 2012 can't get here soon enough...

I assume those are all rhetorical questions. If not, let me know.

This is not a rhetorical question, though: How much did US Treasuries decline, as a result of the downgrade?

If I'm not mistaken, interest rates on US Treasuries have dropped to around 2%, at one point below that. Which actually underlines the fact that the stimulus did not work, because it shows investors both foreign and domestic are flocking to the safe haven of low interest US bonds that will actually be worth less at maturity than they are now if you take inflation into account. They are doing this because they have no faith in the US economy, nobody believes we're going to get anywhere close to reasonable economic growth for quite awhile. Most analysts are downgrading their forecasts for GDP the rest of this year and next year, even the CBO's overly optimistic economic projections say we're looking at low economic growth.

So you can believe what you read or you can believe what you see. Tell the truth, do you really think the stimulus worked?

Correct. Interest rates have fallen. What's supposed to happen when credit gets downgraded? Interest rates are supposed to go up. S&P had 0 effect on the market, which is what you'd expect if you understood why the downgrade was meaningless. But that's not what deficit hawks predicted.

Predicting what will happen in the future is difficult. Making up a story about why it didn't happen, after the fact, is easy. But that's what happened with S&P. They changed the story. So long as you're willing to do that, it's impossible to be wrong.

As to whether I think the stimulus worked... I think that what Bush did, what Bernanke did, and what Obama did - all of it together - kept the nation from going over the cliff. And it's telling, to me, that Congressional Republicans could only be coerced into Doing The Right Thing by 1000 point drops in the Dow. Economists, the Fed, the Treasury, and even their own President couldn't convince them.

I think that deficit spending, more or less by definition, creates jobs. And that's why it's important to do it during a recession. Keynes said you could pay people to dig holes and fill them up again. And WWII was the approximate equivalent (except that it more like digging holes and throwing perfectly good humans into them). Yet it got us out of the Great Depression. That the government should run deficits during a recession is perfectly orthodox economics, and it's taught in college classrooms all across the country.

If you're trying to fill a pool, and a gallon of water doesn't do it, it means you need more water, not that water doesn't work.

 

[Oddball]

This is my last post in this thread, it's all getting very repetitive. For the last time, when the bill was passed, we were losing 600,000 jobs a month. Last month we had a net job gain of 114,000.

In January 2009, economists were predicting monthly job losses to reach nearly million a month and unemployment to reach 10 to 11 percent. Many states were on the verge of massive cuts in health, safety, and education. Had the president done nothing and just waited for the economy to bottom out as many of you have suggested, you would have been demanding action.

As a number of economist have said, the stimulus was not large enough to fuel a robust recovery but large enough to keep the country from going into the 2nd great depression.

For (not) the last time:


POST HOC ERGO PROPTER HOC FALLACY.

Google it, Gomer.

 

[iamwhatiseem]

It's amazing how poor people's memories are. A year and a half ago - this would be the end of Bush's term - stocks were falling a thousand points a day, Wall Street banks were going down like dominos, people were afraid to keep money in a bank unless it was FDIC insured, banks were afraid to lend money to each other, and corporations were like GM and AIG were going belly-up. People - particularly the same ones who now claim the stimulus "didn't work" - were warning about the end of the world, and the collapse of the entire financial system.

Now, a year and a half later, with the crisis itself averted, and the economy slowly on the mend, those same people say it didn't work because we're not back to full employment yet.

And, to add injury to insult, those same people, yet again, are the ones who've deprived us of the one tool necessary and sufficient to speed the recovery along - the ability to deficit spend.

They have no plan themselves - other than to raise taxes on the middle-class and to cut spending, which is like feeding poison to sick patient.

We could have full employment, right now, were we committed to a deficit sufficient to reach that goal. It's the Republicans who've stopped us from achieving it.

All I can say is wow...You really think that we could have full employment if we just borrowed enough money to pay for it? Did you just sleep through the whole credit downgrade thing? We could all live in mansions, drive exotic cars and date super models if we'd just commit to a deficit sufficient to reach THOSE goals as well. Are you really this stupid? You progressives live in an alternate universe where credit cards never have to be paid off and the bank never cuts off your line of credit. It would be laughable except some of you clowns are actually running our freakin' country right now. 2012 can't get here soon enough...

I assume those are all rhetorical questions. If not, let me know.

This is not a rhetorical question, though: How much did US Treasuries decline, as a result of the downgrade?

Americans have lost about $13,000,000,000,000...so far.
I would like for you to address my post about who benefited in the stimulus and who did not.

 

[sparky]

 

[Synthaholic]

By its own stated objectives (unemployment peaking at 8%), the stimulus was an epic fail.

It's also quite representative of why most government programs fail - they don't meet a measurable objective. In the private sector, such programs would be cancelled due to being Bad Investments.

Prove that first sentence.

And while you are failing to do that, maybe you can compile the total amount of state government workers who have been laid off by wingnut governors, and see if that accounts for the other 1-2% of unemployment.

* bump *

 

[Cuyo]

Did the stimulus work? A review of the nine best studies on the subject




Here are the nine studies, organized by the conclusion and method used. Click on each one to see my summary of the study, how it reached its conclusions, and potential problems with its approach.




It worked (econometric):
Feyrer and Sacerdote. Chodorow-Reich, Feiveson, Liscow, and Woolston. Wilson.

It worked (modeling):
Congressional Budget Office. Council of Economic Advisors. Zandi and Blinder.

It worked a little bit (modeling):
Oh and Reis.

It didn’t work (econometric):
Conley and Dupor. Taylor.



As the descriptions above make clear, none of the studies are flawless. But while the optimistic studies do, in fact, support the conclusion that the stimulus worked, there is some reason to doubt that the pessimistic studies support the conclusion that it failed. Conley and Dupor found a negative effect on employment and output but, as they concede and critics of the study have emphasized, their results are not statistically significant. Taylor found that the stimulus did not increase government purchases significantly but, as Noah Smith argued, this result could be consistent with the stimulus increasing employment and output. Oh and Reis found a small multiplier for tax transfers of the kind found in the stimulus package, but as they concede, their model produces estimates for key figures that are empirically implausible. Using more plausible figures produces a significantly larger multiplier, meaning the package was more effective than the model initially suggested. Due to these issues, I’m inclined to believe that the preponderance of evidence indicates the stimulus worked.

Success depends on how you define success. If you are one of the several million who got jobs since the stimulus package became law, then likely you see it as a success. But if you lost your job and remain unemployed, then it was certainly a failure.

Only part of the story. Even if you're still unemployed (and my heart goes out to anyone who is), you may well still have been shielded from the consequences of a bigger collapse.

The truth is, we'll never know for sure how 'successful' it has been and continues to be. We'll only be able to speculate.

 

[Oddball]

By its own stated objectives (unemployment peaking at 8%), the stimulus was an epic fail.

It's also quite representative of why most government programs fail - they don't meet a measurable objective. In the private sector, such programs would be cancelled due to being Bad Investments.

Prove that first sentence.

And while you are failing to do that, maybe you can compile the total amount of state government workers who have been laid off by wingnut governors, and see if that accounts for the other 1-2% of unemployment.

* bump *

http://www.usmessageboard.com/4058483-post88.html

 

[Oldstyle]

Did the stimulus work? A review of the nine best studies on the subject




Here are the nine studies, organized by the conclusion and method used. Click on each one to see my summary of the study, how it reached its conclusions, and potential problems with its approach.




It worked (econometric):
Feyrer and Sacerdote. Chodorow-Reich, Feiveson, Liscow, and Woolston. Wilson.

It worked (modeling):
Congressional Budget Office. Council of Economic Advisors. Zandi and Blinder.

It worked a little bit (modeling):
Oh and Reis.

It didn’t work (econometric):
Conley and Dupor. Taylor.



As the descriptions above make clear, none of the studies are flawless. But while the optimistic studies do, in fact, support the conclusion that the stimulus worked, there is some reason to doubt that the pessimistic studies support the conclusion that it failed. Conley and Dupor found a negative effect on employment and output but, as they concede and critics of the study have emphasized, their results are not statistically significant. Taylor found that the stimulus did not increase government purchases significantly but, as Noah Smith argued, this result could be consistent with the stimulus increasing employment and output. Oh and Reis found a small multiplier for tax transfers of the kind found in the stimulus package, but as they concede, their model produces estimates for key figures that are empirically implausible. Using more plausible figures produces a significantly larger multiplier, meaning the package was more effective than the model initially suggested. Due to these issues, I’m inclined to believe that the preponderance of evidence indicates the stimulus worked.

Success depends on how you define success. If you are one of the several million who got jobs since the stimulus package became law, then likely you see it as a success. But if you lost your job and remain unemployed, then it was certainly a failure.

Only part of the story. Even if you're still unemployed (and my heart goes out to anyone who is), you may well still have been shielded from the consequences of a bigger collapse.

The truth is, we'll never know for sure how 'successful' it has been and continues to be. We'll only be able to speculate.

If you're unemployed, you may have been shielded from the consequences of a bigger collapse? Huh? Pardon me for pointing out the obvious here...but how have you been "shielded" from anything if you're out of a job? That's one of the dumber comments I've ever seen here.

 

[Cuyo]

Success depends on how you define success. If you are one of the several million who got jobs since the stimulus package became law, then likely you see it as a success. But if you lost your job and remain unemployed, then it was certainly a failure.

Only part of the story. Even if you're still unemployed (and my heart goes out to anyone who is), you may well still have been shielded from the consequences of a bigger collapse.

The truth is, we'll never know for sure how 'successful' it has been and continues to be. We'll only be able to speculate.

If you're unemployed, you may have been shielded from the consequences of a bigger collapse? Huh? Pardon me for pointing out the obvious here...but how have you been "shielded" from anything if you're out of a job? That's one of the dumber comments I've ever seen here.

Are you suggesting that being unemployed is the worst thing that can occur due to an economic collapse?

 

[Synthaholic]

Prove that first sentence.

And while you are failing to do that, maybe you can compile the total amount of state government workers who have been laid off by wingnut governors, and see if that accounts for the other 1-2% of unemployment.

* bump *

http://www.usmessageboard.com/4058483-post88.html

So you are ducking the question? No surprise.

Here it is again:


maybe you can compile the total amount of state government workers who have been laid off by wingnut governors, and see if that accounts for the other 1-2% of unemployment.

 

[Oddball]

Entirely irrelevant to the claim, now documented, that unemployment was projected to not exceed 8%....By that metric, the succubus is and remains a towering failure.

Talk about ducking.

 

[Cuyo]

Entirely irrelevant to the claim, now documented, that unemployment was projected to not exceed 8%....By that metric, the succubus is and remains a towering failure.

Talk about ducking.

The projection was wrong. So what? It doesn't impeach the whole program the way you think it does. Whose to say it wouldn't be 15 now in lieu? You?

 

[Oddball]

Right....Like I said....Failure is presented as evidence that you didn't do enough soon enough.

Forget the fact that you cannot roll back the clock to determine this claim in any objective way.

How about a little human sacrifice to appease the Sun God?