The uncertainty of stimulus
From a Congressional Budget Office estimate released today on the impact of some amendment or other to the Senate stimulus bill:
The macroeconomic impacts of any economic stimulus program are very uncertain. Economic theories differ in their predictions about the effectiveness of stimulus. Furthermore, large fiscal stimulus is rarely attempted, so it is difficult to distinguish among alternative estimates of how large the macroeconomic effects would be. For those reasons, some economists remain skeptical that there would be any significant effects, while others expect very large ones.
It's sort of like that mutual fund boilerplate, "Past performance is no guarantee of future results." Except that we're not even sure of what the past performance was. (And I say this as somebody who thinks the stimulus legislation is on balance a good idea.)
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1
Justin,
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There might be an uncertainty in stimulus, but there is a Lehman-like certainty in not taking action when it is expected. I dare Congress to disappoint the global market again. -
2
Well, it looks like the CBO has fallen victim to "bi-partisan" disease. It used to be non-partisan; it didn't matter where the idea came from, all that mattered was whether it worked. But "bi-partisanship" means keeping both sides equally happy, and so rather than rigorous analysis, we get this kind of slop.
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3
pluk,
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Further, they weren't so uncertain last year about Bush's plan for reinvigoration.
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