tag:blogger.com,1999:blog-1740670447258719504.post5900137609715121608..comments2024-03-18T06:41:03.841-04:00Comments on Facts & other stubborn things: Don Boudreaux, what say you?Evanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-1740670447258719504.post-84327897036802107432010-08-16T12:52:17.452-04:002010-08-16T12:52:17.452-04:00No, my point is that cumulative spending is import...No, my point is that cumulative spending is important, because percent change can be totally irrelevant if one country simply has spent disproportionally more than another. In other words, if Germany has spent $1 so far on the crisis, and the United States $100, what does it matter if Germany increases spending by 100%? It still amounts only to $2.Jonathan M.F. Catalánhttp://www.economicthought.net/noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-34478466227014953812010-08-16T12:41:45.517-04:002010-08-16T12:41:45.517-04:00And ultimately I'm not trying to make a solid ...And ultimately I'm not trying to make a solid case for fiscal policy here.<br /><br />My point is only that Germany responded at least as vigorously, relative to their baseline spending before the crisis, as the U.S.. You add that to the significant differences in the nature of the crisis, and you really have to scratch your head as to what Don is talking about.Danielhttps://www.blogger.com/profile/17192667997950934790noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-2485250325356989912010-08-16T12:40:26.434-04:002010-08-16T12:40:26.434-04:00Oh I know you said it - sorry didn't mean that...Oh I know you said it - sorry didn't mean that to be a refutation. Just adding the other concern that's been brought up, namely monetary flexibility.<br /><br />On the percent of GDP - no I don't have that but that's my point in response to you - for structural questions the public share of the economy is certainly going to matter a great deal. For cyclical questions it really makes sense to look at rates of change acting on rates of change in output. <br /><br />I'm not quite sure it's appropriate to use rates of change in percent of GDP, though, because then the variable you're explaining (GDP) is on the right and left hand side of the equation since it will be in the denominator.<br /><br />It's like people ignoring the fact that a big part of the reason why Hoover's spending as a percent of GDP increased so much was that the denominator was falling so precipitously! Does it tell you that when you keep spending more or less constant GDP will fall, or does it tell you that if you increase spending as a percent of GDP, then GDP will fall?<br /><br /><i>"That was my entire point when I asked for a graph depicting cumulative spending altogether."</i><br /><br />And my point was that that is inappropriate because it's relevant for structural questions, but not fiscal policy impact or cyclical questions. All I was trying to get at with the cumulative chart is just to look at the total change in government spending over the course of the crisis.Danielhttps://www.blogger.com/profile/17192667997950934790noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-58536126349371004062010-08-16T12:04:55.301-04:002010-08-16T12:04:55.301-04:00Err, I did not mean to say "smaller change in...Err, I did not mean to say "smaller change in output". I mean to say "smaller change in spending".Jonathan M.F. Catalánhttp://www.economicthought.net/noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-22865865188432138352010-08-16T12:04:06.384-04:002010-08-16T12:04:06.384-04:00Yes, that's what I said in my comment, Spain&#...Yes, that's what I said in my comment, Spain's recession was different from that of Germany's. That was, in fact, one of my points.<br /><br />And, um, your graphs don't depict what each country spends as a percentage of GDP. It depicts spending as percentage changes, which is <i>different</i>. That was my entire point when I asked for a graph depicting cumulative spending altogether.<br /><br />"When we're tracking rate of change in output, I think we want to look at rate of change in spending, don't we? "<br /><br />Yes and no. I'm not saying this is the case, but the U.S. government could have been spending 100x as much as the German government, and so a smaller change in output would really be inconsequential, as all-around deficit spending would still be greater.Jonathan M.F. Catalánhttp://www.economicthought.net/noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-73161586623347673782010-08-16T11:49:33.137-04:002010-08-16T11:49:33.137-04:00"Spain also has extensive "automatic sta...<i>"Spain also has extensive "automatic stabilizers", yet is worse off than any other country in Western Europe."</i><br /><br />Spain also had a banking crisis and no recourse to devaluation, no?<br /><br /><i>"In any case, I'd like to see comparisons between actual spending. Percent change honestly says really little, and if the argument is based totally on spending it would mean that the United States should still be doing better than it is, even if not as good as Germany."</i> <br /><br />Why would levels inform percent change in GDP? So let's say the U.S. government spends half what Germany does as a percentage of GDP. If the U.S. increased government spending by 100% are you saying that that fiscal policy would now be comparable to the Germans?<br /><br />When we're tracking rate of change in output, I think we want to look at rate of change in spending, don't we?Danielhttps://www.blogger.com/profile/17192667997950934790noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-77835307620871551022010-08-16T11:45:31.376-04:002010-08-16T11:45:31.376-04:00I don't think it has anything to do with "...I don't think it has anything to do with "automatic stabilizers". Spain also has extensive "automatic stabilizers", yet is worse off than any other country in Western Europe. The nature of the recession in Germany is just different from that in the United States and Spain. The German problem is that it felt the ripple effects of the bubble, mostly through out its export industry. It's not as structural as Spain's or the United States's.<br /><br />In any case, I'd like to see comparisons between actual spending. Percent change honestly says really little, and if the argument is based totally on spending it would mean that the United States should still be doing better than it is, even if not as good as Germany.Jonathan M.F. Catalánhttp://www.economicthought.net/noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-39292269788053938502010-08-16T10:59:01.318-04:002010-08-16T10:59:01.318-04:00Because when you talk about Germany weathering the...Because when you talk about Germany weathering the "crisis" better than the U.S., well, for me at least I like to see it in the context of Germany's structural problems.Xenophonhttp://myob.myob.myob.myob.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-11941136892659484462010-08-16T10:39:21.143-04:002010-08-16T10:39:21.143-04:00You're certainly not going to find any justifi...You're certainly not going to find any justification at all for Germany's structural problems in quarterly, percentage change data covering the last couple years - which is the data I'm presenting here.Danielhttps://www.blogger.com/profile/17192667997950934790noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-84494352640963161262010-08-16T10:38:20.499-04:002010-08-16T10:38:20.499-04:00Xenophon, I'm just struggling to understand ho...Xenophon, I'm just struggling to understand how that informs the policy issues Don and I are discussing. The general findings of the literature have been that other policy positions inform Germany's structural problems.Danielhttps://www.blogger.com/profile/17192667997950934790noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-75139952634434635682010-08-16T10:36:32.464-04:002010-08-16T10:36:32.464-04:00Yes, and Germany has been undergoing a long-term &...Yes, and Germany has been undergoing a long-term "crisis" - which has hampered its role as the supposed "engine" of European economic prosperity.Xenophonhttp://myob.myob.myob.myob.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-24358049548678547372010-08-16T08:43:50.939-04:002010-08-16T08:43:50.939-04:00"Germany has been in a bad place in compariso...<i>"Germany has been in a bad place in comparison to the U.S. for quite some time ... if we think of this in terms of unemployment, etc"</i><br /><br />Right, but you're talking structural differences - Don and I are talking cyclical differences.Danielhttps://www.blogger.com/profile/17192667997950934790noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-8082822842005781812010-08-16T08:19:44.322-04:002010-08-16T08:19:44.322-04:00The David Kennedy interview with Russ Roberts is q...The David Kennedy interview with Russ Roberts is quite good. One thing Kennedy points out was the autarky of the Roosevelt adminsitration.Xenophonhttp://myob.myob.myob.myob.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-47928976094426180002010-08-16T07:32:07.902-04:002010-08-16T07:32:07.902-04:00Germany's federalism is much stronger than Ame...Germany's federalism is much stronger than American federalism; in large part that is the result of the development of the German state after WWII. The sort of strong arm tactics that the federal government does in the U.S. are somewhat unheard of in Germany. <br /><br />"Add to these stubborn facts that Germany didn't have nearly as bad a crisis as we did in the first place..."<br /><br />Germany has been in a bad place in comparison to the U.S. for quite some time ... if we think of this in terms of unemployment, etc.Xenophonhttp://myob.myob.myob.myob.comnoreply@blogger.com