Saturday, November 06, 2010

Becker on U.S./U.K. policies...

...from the Becker-Posner Blog:

Of course, perhaps other factors, such as the uncertainty about the business environment that Congress and the President created through their rhetoric, and also through their actual and proposed legislation, offset powerful effects of the fiscal stimulus itself in reducing unemployment. The unpleasant fact we economists have to face is that there is not strong evidence on the actual effects of governmental spending on employment and GDP. The usual claimed effects are generally based on predictions from highly imperfect theoretical models of the economy rather than from strong direct and clear evidence on the employment consequences of different fiscal stimuli.

How many Trillions must be "spent" (QE, and QE2 do not fall within the purview of "deficit spending" in my opinion and are mere asset swaps of differing maturities) in this experiment before a decision is made as to the efficacy of the measures?

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