Here. In a nutshell, it wasn't nearly as stimulative as it could have been because too little of it was spent on consumption and investment.
I largely agree with this, but I think it glosses over two really important points:
1. At the zero lower bound, any deficit spending - even on transfers - is going to help monetary policy get traction than it would otherwise have, and that is a benefit.
2. Transfers go to certain types of people. Many, although not all, of these people are paycheck-to-paycheck types. Permanint income hypothesis concerns (which are legitimate, I think) apply much less to this group. The MPC of this crowd is quite high.
Still, a job is better than a transfer payment and it would have been nice to see more direct investment spending and employment (along with simply a bigger stimulus).
Out of curiosity, Daniel Kuehn...
ReplyDelete1.) Have you e-mailed Dr. Michael Emmett Brady on his views of stimulus and multiplier studies?
2.) According to Dr. Michael Emmett Brady, if you perform exploratory data analysis and goodness of fit tests, the standard normal distribution fits the data for the economics of consumption. That stated, have you ever tried to do a study on the so-called "relative income hypothesis" that was proposed by the late James Duesenberry?