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HonestChieffan
11-24-2009, 11:58 AM
Pretty interesting reading if you have the time and motivation.

http://www.economics.harvard.edu/faculty/alesina/files/Large%2Bchanges%2Bin%2Bfiscal%2Bpolicy_October_2009.pdf

An interesting paragraph:

"Our results suggest that tax cuts are more expansionary than spending increases
in the cases of a fiscal stimulus. Based upon these correlations we would argue that
the current stimulus package in the US is too much tilted in the direction of spending
rather than tax cuts. For fiscal adjustments we show that spending cuts are
much more effective than tax increases in stabilizing the debt and avoiding economic
downturns. In fact, we uncover several episodes in which spending cuts
adopted to reduce deficits have been associated with economic expansions rather
than recessions. We also investigate which components of taxes and spending affect
the economy more in these large episodes and we try uncover channels running
through private consumption and/or investment."

sportsman1
11-24-2009, 12:03 PM
Much more in-depth than my term paper, but same principle.
In fact, we uncover several episodes in which spending cuts
adopted to reduce deficits have been associated with economic expansions rather
than recessions.

Might be something to use in there because this is a premise that many economists have held for a long-time. Considering Harvard as the source it holds some universial cred.

ROYC75
11-24-2009, 12:08 PM
Getting Liberals to believe this is like talking to the wall. Conservatives have known this for years and yet all politicians want to do is get their own hands into the pie and making BIG GOVERNMENT.

As Earl Pitts would say, Come On, Wake Up America.!

mlyonsd
11-24-2009, 12:26 PM
It's almost impossible to grant bold pig faced earmarks to your fellow congressmen with a tax cut.

The last stimulus was a sham. F'ing sham.

wild1
11-24-2009, 12:31 PM
The whole idea of robbing from one person to pay someone else, trying to use government spending as stimulus, is borrowed right out of the centrally planned economy playbook.

No wealth is being created. If anything, wealth is being destroyed along the way through inefficiency in the government's system of wealth redistribution and through their printing of money.

The whole idea is that we can create growth by destroying wealth, because the greatest of efficiency is a few experts around a board room in Washington planning the economy.

This idea has failed every time it's been tried. But we are doomed to repeat the lessons of history, it seems.

KC native
11-24-2009, 12:43 PM
Looks like an interesting paper. Don't have time to get too much into right now (will read it later) but it seems like it's a tail wagging the dog type of paper.

If anyone else reads it the keys to this paper are

1) 1970-2007 is a short time frame for a regression and they even hedge their regression analysis at the start by saying

In this section we present some simple regressions on GDP growth as a function
of changes of fiscal policy in the recent past. We should put up-front the fact that
causality issues are all over the place here and we do not claim to have solved them.
These regressions should be viewed as correlations, but we find them instructive
and the message which they send is on the same line of that emerging from our
descriptive analysis above.

These types of statements mean you really have to get in the nuts and bolts to see if their analysis is robust because this statement gives them a lot of leeway in attributing events to outcomes.

This paper is organized as follows. Section 2 discusses our data and the definition
of episode which we adopt. Section 3 presents basis statistics on the episodes
showing rather striking results. Section 4 shows some regression analysis, which
although it has no pretence of having solved causality problems reinforces the results
obtained by the simple statistics of Section 3.

Again another section at the beginning that throws up huge red flags that their analysis may not be very robust.

2) The definitions. I don't have time right now to be nit picky but these are going to be key.

ROYC75
11-24-2009, 12:49 PM
The whole idea of robbing from one person to pay someone else, trying to use government spending as stimulus, is borrowed right out of the centrally planned economy playbook.

No wealth is being created. If anything, wealth is being destroyed along the way through inefficiency in the government's system of wealth redistribution and through their printing of money.

The whole idea is that we can create growth by destroying wealth, because the greatest of efficiency is a few experts around a board room in Washington planning the economy.

This idea has failed every time it's been tried. But we are doomed to repeat the lessons of history, it seems.

Where dose wisdom and knowledge sink in ? Seriously, we have been down this road before, we didn't learn from it. Keep giving it the old college try, If at first you don't succeed at first, try, try again.

Keep raising the taxes on the rich, the corporations and continue to watch the jobs go over seas.

HonestChieffan
11-24-2009, 12:58 PM
Im sure Harvard will put this on hold till Native has time to review and comment.

googlegoogle
11-24-2009, 01:03 PM
The entire liberal curriculum at certain liberal universities needs for the stimulus to work or their entire theories that they 'think' they learned from FDR are wrong or were just lies.

KC native
11-24-2009, 01:04 PM
Actually just finished it and I hope they publish more of it or extend their data set. This is, as it stands, complete shiite.

First, they completely ignore the money multiplier portion of economics which could and more than likely would dramatically alter their results.

Second, a simple regression? There are too many variables and causality issues for a simple regression to hold any water here.

Third, Again you show what a dishonest one who sucks the penis you are. The authors didn't claim that government spending was ineffective. They laid out two scenarios in which government spending was likely to be effective and and unlikely to be effective. They don't even mention the tax portion until their conclusion and don't offer any evidence to back their opinion that tax cuts would have been more beneficial.

Chief Faithful
11-24-2009, 01:08 PM
The whole idea of robbing from one person to pay someone else, trying to use government spending as stimulus, is borrowed right out of the centrally planned economy playbook.

No wealth is being created. If anything, wealth is being destroyed along the way through inefficiency in the government's system of wealth redistribution and through their printing of money.

The whole idea is that we can create growth by destroying wealth, because the greatest of efficiency is a few experts around a board room in Washington planning the economy.

This idea has failed every time it's been tried. But we are doomed to repeat the lessons of history, it seems.

The "Tytler Cycle":
From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage.

2bikemike
11-24-2009, 01:11 PM
Hell it doesn't take a genius or an economist to figure all this out. Just look at your own personal budget. You can keep consuming and spending yourself deeper and deeper into debt by taking on liabilities you just can't afford. Eventually the proverbial shit will hit the fan. Isn't that what just happened with all these foreclosures?

KC native
11-24-2009, 01:16 PM
Hell it doesn't take a genius or an economist to figure all this out. Just look at your own personal budget. You can keep consuming and spending yourself deeper and deeper into debt by taking on liabilities you just can't afford. Eventually the proverbial shit will hit the fan. Isn't that what just happened with all these foreclosures?

Um, that's not what the paper deals with at all.

KC Dan
11-24-2009, 01:20 PM
Um, that's not what the paper deals with at all.nor our gov't

Chief Faithful
11-24-2009, 01:21 PM
First, they completely ignore the money multiplier portion of economics which could and more than likely would dramatically alter their results.



The money multiplier portion or also known as capital creation theory is a function of the private sector. The one truth of this theory the government is seen as a consumer of capital drawing resources from the private economy. From the government perspective spending and taxation is used as a counter balance to rapid economic expansion.

JFK admitted to the use of this theory when he raised taxes to slow the economy in the early years of the Vietnam War. The thought was to slow capital creation during rapid expansion of the war industry as a means to create a long sustained period of growth for the US economy.

Conversly, when government increases capital consumption (spending & taxation) during a downturn it can create a long sustained downturn.

The theory worked for JFK as it created a long sustained period of around 3% growth. It also appears to be working for Obama as the economy is on a very stable downturn.

wild1
11-24-2009, 01:21 PM
The "Tytler Cycle":
From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage.

from hope... to change.... to free stuff for everyone... to.... happiness?

KCTitus
11-24-2009, 06:15 PM
Tax rate cuts are always effective. It's been proven time and time again. You dont need a Harvard study to know that when people who risk capital are allowed to profit from those risks, the economy expands and tax revenues increase.

petegz28
11-24-2009, 06:38 PM
So let me get this straight..

economy is bad so tax cuts = more money to spend???

vs.

economy is bad so increased taxes and Fed Gov spending = less money to spend and more debt?

I think I am going with the tax cuts