Weatherman2020
Diamond Member
Unintended consequences of a government program ends in negative effects to the economy.
My shocked face is in the shop, the Dems have really given it a thrashing this past 10 years.
And like always, they will never apologize to the poor they hurt.
Three economists (from MIT and Tex A&M) have crunched the numbers and discovered that Obama’s Cash-for-Clunkers scheme back in 2009 was a failure even by Keynesian standards.
The abstract of the study tells you everything you need to know.
The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.
This is remarkable. At the time, the most obvious criticism of the scheme was that it would simply alter the timing of purchases.
And scholars the following year confirmed that the program didn’t have any long-run impact.
But now we find out that there was impact, but it was negative. Here’s the most relevant
My shocked face is in the shop, the Dems have really given it a thrashing this past 10 years.
And like always, they will never apologize to the poor they hurt.
Three economists (from MIT and Tex A&M) have crunched the numbers and discovered that Obama’s Cash-for-Clunkers scheme back in 2009 was a failure even by Keynesian standards.
The abstract of the study tells you everything you need to know.
The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.
This is remarkable. At the time, the most obvious criticism of the scheme was that it would simply alter the timing of purchases.
And scholars the following year confirmed that the program didn’t have any long-run impact.
But now we find out that there was impact, but it was negative. Here’s the most relevant