Reason Mankiw against stimulus package is explained in the chart on the Government revenue as a percent of GDP.
Notably in the graph above is the "enlarged" by the U.S. government in the period from 1929 to 1945. It's easy to understand why the government "growth" so much in this period: the government has responded to economic collapse in the Great Depression, and especially after World War II.
Mankiw special attention a very important point: But what is noteworthy is that while crises Were These transitory, the Increase in the scope of Government verb was permanent.
Crisis in the short term but the "expansion" of the state apparatus takes place in the long term from 1929-1945.
One question that Mankiw interesting questions suggested reporters should focus on the economic stimulus plan by the U.S. government when the economy is back at work and normal growth as before the national budget family will like?
Here is one question When Reporters Should focus on evaluating the proposed plan: Five or ten years from now, When the economy is presumably at some normal level of employment and Growth, what the federal budget will look like, as evaluated by the budget deficit and tax revenue as a share of GDP?
Eve also noted five reasons that David Backus, NYU professor of economics, Fiscal stimulus object. Stimulus skeptic
- Hard to do: hard to spend hundreds of billions more to the current administrative system, even harder to pay for the projects really are useful to society
- Bad timing: the majority of economists predict the economy will stabilize in the second half back in 2009 and restored in 2010, while the fast stimulus plan can only boot into the second half of 2009 and really have an impact on the economy in 2010, when the economy no longer needs the stimulus (see more about the latency of the policy here).
- Small multiplier: textbooks, although that is approximately 2 Fiscal multipliers, economists, even those who support the stimulus as Krugman, only approximately one dared to believe multiplier, even smaller than 1. If so $ 700b stimulus in two years will be equivalent to only 2.5% of GDP each year, does not mean much compared to the level of economic decline (4-5% negative.)
- Long-term budget issues: the long term the U.S. will face the more serious crisis concerning the social insurance fund and health insurance. Hand over the forehead area in the present time when government debt is sure to be handcuffing themselves in the future if required to resolve other long-term problem.
- It's the financial system: the current crisis in the U.S. like Japan time 90s, which is the financial system crisis. Therefore it is important to clean up the financial system rather than continue pouring money into the stimulus. Japan has a lot of money to spend on Fiscal stimulus but not to salvage the situation, Koizumi must go to the government solved the problem of bad debts in the banking system, the new Japanese escape the crisis.
Personalized Christmas Eve he is "inclined to the Krugman, not because" that people started to put them ", but I think the U.S. economy is still hiding a lot of risk (eg credit card lending). Fiscal stimulus Therefore, although there may be more limited as Mankiw and Backus pointed out, that acts as a preemptive measure, to prevent the weakest unwind at the time not wanting to. In addition, the U.S. economy as a patient out of danger just play (hope so) but very weak immune system, a dose of antibiotics can help prevent this disease succumb to the sudden shock New from the outside (natural disasters, terrorism ...) ".
Notably in the graph above is the "enlarged" by the U.S. government in the period from 1929 to 1945. It's easy to understand why the government "growth" so much in this period: the government has responded to economic collapse in the Great Depression, and especially after World War II.
Mankiw special attention a very important point: But what is noteworthy is that while crises Were These transitory, the Increase in the scope of Government verb was permanent.
Crisis in the short term but the "expansion" of the state apparatus takes place in the long term from 1929-1945.
One question that Mankiw interesting questions suggested reporters should focus on the economic stimulus plan by the U.S. government when the economy is back at work and normal growth as before the national budget family will like?
Here is one question When Reporters Should focus on evaluating the proposed plan: Five or ten years from now, When the economy is presumably at some normal level of employment and Growth, what the federal budget will look like, as evaluated by the budget deficit and tax revenue as a share of GDP?
Eve also noted five reasons that David Backus, NYU professor of economics, Fiscal stimulus object. Stimulus skeptic
- Hard to do: hard to spend hundreds of billions more to the current administrative system, even harder to pay for the projects really are useful to society
- Bad timing: the majority of economists predict the economy will stabilize in the second half back in 2009 and restored in 2010, while the fast stimulus plan can only boot into the second half of 2009 and really have an impact on the economy in 2010, when the economy no longer needs the stimulus (see more about the latency of the policy here).
- Small multiplier: textbooks, although that is approximately 2 Fiscal multipliers, economists, even those who support the stimulus as Krugman, only approximately one dared to believe multiplier, even smaller than 1. If so $ 700b stimulus in two years will be equivalent to only 2.5% of GDP each year, does not mean much compared to the level of economic decline (4-5% negative.)
- Long-term budget issues: the long term the U.S. will face the more serious crisis concerning the social insurance fund and health insurance. Hand over the forehead area in the present time when government debt is sure to be handcuffing themselves in the future if required to resolve other long-term problem.
- It's the financial system: the current crisis in the U.S. like Japan time 90s, which is the financial system crisis. Therefore it is important to clean up the financial system rather than continue pouring money into the stimulus. Japan has a lot of money to spend on Fiscal stimulus but not to salvage the situation, Koizumi must go to the government solved the problem of bad debts in the banking system, the new Japanese escape the crisis.
Personalized Christmas Eve he is "inclined to the Krugman, not because" that people started to put them ", but I think the U.S. economy is still hiding a lot of risk (eg credit card lending). Fiscal stimulus Therefore, although there may be more limited as Mankiw and Backus pointed out, that acts as a preemptive measure, to prevent the weakest unwind at the time not wanting to. In addition, the U.S. economy as a patient out of danger just play (hope so) but very weak immune system, a dose of antibiotics can help prevent this disease succumb to the sudden shock New from the outside (natural disasters, terrorism ...) ".
No comments:
Post a Comment