The Cellar - View Single Post

02-13-2009, 06:13 PM

I think the point made by the Moody economist in his macroeconomic model is that income support (extended unemployment insurance, food stamps, etc) are the best short term means of infusing money into the economy. Those on the margin will spend it quickly on food, essential house hold goods, etc.

Increased income support has been part of the federal response to most recessions, and for good reason: It is the most efficient way to prime the economy's pump. Simulations of the Moody’s Economy.com macroeconomic model show that every dollar spent on UI benefits generates an estimated $1.63 in near-term GDP.x Boosting food stamp payments by $1 increases GDP by $1.73 (see Table 2). People who receive these benefits are hard pressed and will spend any financial aid they receive very quickly.

Infrastructure spending brings the next biggest bang for the bucks

The boost to GDP from every dollar spent on public infrastructure is large—an estimated $1.59—and there is little doubt that the nation has underinvested in infrastructure for some time, to the increasing detriment of the nation's long-term growth prospects

Tax cuts are the least stimulative.

http://www.economy.com/mark-zandi/do...lan_012109.pdf

more: http://www.economy.com/mark-zandi/de...onomy_homepage

It is just one economic model among many, but one that, for the most part, I agree with.

But If I was the economic czar, I would have recommended more $$$ into infrastructure funding and far less in tax relief, particularly for the top taxpayers.

02-13-2009, 06:13 PM	#12
Redux Guest Posts: n/a	I think the point made by the Moody economist in his macroeconomic model is that income support (extended unemployment insurance, food stamps, etc) are the best short term means of infusing money into the economy. Those on the margin will spend it quickly on food, essential house hold goods, etc. Increased income support has been part of the federal response to most recessions, and for good reason: It is the most efficient way to prime the economy's pump. Simulations of the Moody’s Economy.com macroeconomic model show that every dollar spent on UI benefits generates an estimated $1.63 in near-term GDP.x Boosting food stamp payments by $1 increases GDP by $1.73 (see Table 2). People who receive these benefits are hard pressed and will spend any financial aid they receive very quickly. Infrastructure spending brings the next biggest bang for the bucks The boost to GDP from every dollar spent on public infrastructure is large—an estimated $1.59—and there is little doubt that the nation has underinvested in infrastructure for some time, to the increasing detriment of the nation's long-term growth prospects Tax cuts are the least stimulative. http://www.economy.com/mark-zandi/do...lan_012109.pdf more: http://www.economy.com/mark-zandi/de...onomy_homepage It is just one economic model among many, but one that, for the most part, I agree with. But If I was the economic czar, I would have recommended more $$$ into infrastructure funding and far less in tax relief, particularly for the top taxpayers. Last edited by Redux; 02-13-2009 at 06:38 PM.