The Stimulus Is A Failure

[KrazyHorse]

Oerdin: apply some critical thought. How did they get that number? How many data points do they have for massive government spending during a serious recession? Why would you possibly believe them when they report the number to 3 sig figs?

[Dinner]

Without looking at their methodology I feel uncomfortable hazarding a guess. It very well could be that the study was well done.

[Kuciwalker]

Dude, given the facts we know (neatly summarized by KH) it's easy to guess a bound on how much any study could divine. And 3 sig figs is well outside that bound.

[Zkribbler]

And I've already posted a source which claims that for the US the effect on GDP of increased spending is indistinguishable from 0.

The "source" you posted is you [in Post #77]:

I'm honestly skeptical of the whole notion that government stimulus spending has a multiplier significantly different than 0, given the multitude of political problems that arise when large amounts of money are to be spent quickly.

Do you have a somewhat more reliable source??

[Darius871]

Telling me that Moody's isn't partisan and is therefore a reliable source for this info is like telling me that CNN isn't partisan, therefore I should trust them when they tell me that the mass of the Higgs boson is 185.3 GeV. They don't have that information. Nobody does.

Why do you bother?

[KrazyHorse]

The "source" you posted is you [in Post #77]:



Do you have a somewhat more reliable source??

Luckily I have posted places other than on this thread. ****.

[Drake Tungsten]

Recovery's Missing Ingredient: New Jobs
Experts Warn of A Long Dry Spell

Despite signs that the recession gripping the nation's economy may be easing, the unemployment rate is projected to continue rising for another year before topping out in double digits, a prospect that threatens to slow growth, increase poverty and further complicate the Obama administration's message of optimism about the economic outlook.

The likelihood of severe unemployment extending into the 2010 midterm elections and beyond poses a significant political hurdle to President Obama and congressional Democrats, who are already under fire for what critics label profligate spending. Continuing high unemployment rates would undercut the fundamental argument behind much of that spending: the promise that it will create new jobs and improve the prospects of working Americans, which Obama has called the ultimate measure of a healthy economy.

"Our hope would be to actually create some jobs this year," Obama said in an interview with The Washington Post in the days before taking office.

Obama has defended his economic approach -- which includes the $787 billion economic stimulus plan and record investments in health care, alternative energy, education and job training -- as necessary to stabilize the shaky economy and point the way to job growth.

So far, the White House has counseled patience even as the political debate surrounding its economic policies grows more urgent. Officials point out that job growth will not come until robust economic expansion takes hold, which they expect will happen as stimulus funding works its way through the economy. Still, the flagging job market is likely to stir calls for further stimulus efforts as polls show voters growing increasingly wary of federal spending in the wake of a costly series of financial- and auto-industry bailouts and amid current efforts to expand health-care coverage to the uninsured, which is estimated to cost at least $1 trillion over the next decade.

With many forecasters projecting unemployment to remain above 10 percent next year and not return to pre-recession levels of roughly 5 percent for years after that, Obama is likely to be confronted with defending the effectiveness of his economic policies as the nation endures its worst employment situation in a generation.

Analysts say the high levels of joblessness would be accompanied by increases in child poverty, strained government budgets, and black and Latino unemployment rates approaching 20 percent.

"I find it unfathomable that people are not horrified about what is going to happen," said Lawrence Mishel, president of the Economic Policy Institute. "I regard all this talk about how the recession is maybe going to end, all the talk about deficits and inflation, to be the equivalent of telling Americans, 'You are just going to have to tough it out.' But we're looking at persistent unemployment that is going to be extraordinarily damaging to many communities. There is a ton of pain in the pipeline."

Christina Romer, chairman of the Council of Economic Advisers, said that while the president is "very concerned" about the unemployment forecasts, the White House has assumed "a posture of watchful waiting," adding: "There will be big increases in stimulus spending in the fall and early next year. We have to wait to see what happens with that. If you get to the end of this year or early next year and employment is still limping back, then we have to do some serious thinking about whether there might be special problems in the labor market that require targeted interventions."

Before passage of the stimulus bill, the Obama administration had predicted that unemployment would peak at 8 percent before beginning to abate this fall. But unemployment has already reached 9.4 percent, the highest level in a quarter-century, and the situation is not projected to start improving until long after the White House had predicted.

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/21/AR2009062101859.html

We are so ****ed.

[Vanguard]

Why would you possibly believe them when they report the number to 3 sig figs?

There is no problem with precision here. The food stamp multiplier is a ratio used for comparing different types of stimulus and can certainly be calculated to 3 significant figures, provided all other types of stimulus are calculated the same way. It may be wrong, it may be useless, but there is no problem with precision.

I mean, what are they supposed to say? That releasing $1 of food stamps generates either: a) $1 dollar of economic activity; or, more frequently, b) $2 of economic activity?

Sharpe ratios are calculated to 3 digits with far less meaningful data and nobody has much problem with that.

[KrazyHorse]

The food stamp multiplier is a ratio used for comparing different types of stimulus and can certainly be calculated to 3 significant figures, provided all other types of stimulus are calculated the same way. It may be wrong, but there is no problem with precision.

How dumb can you get?

The issue is how robust the conclusion is across various sets of models. The "food stamp multiplier" you're referring to is the result of a very specific kind of analysis with certain specific input parameters and model assumptions. It is therefore highly irresponsible to report any given fiscal multiplier as fact. The more precisely to which you report these numbers the more you're accepting the methodology of a single analysis.

[Vanguard]

The food stamp multiplier is a ratio used for comparing different types of stimulus and can certainly be calculated to 3 significant figures, provided all other types of stimulus are calculated the same way. It may be wrong, but there is no problem with precision.

How dumb can you get?

The issue is how robust the conclusion is across various sets of models. The "food stamp multiplier" you're referring to is the result of a very specific kind of analysis with certain specific input parameters and model assumptions. It is therefore highly irresponsible to report any given fiscal multiplier as fact. The more precisely to which you report these numbers the more you're accepting the methodology of a single analysis.

KrazyHorse, you are an idiot.

Sharpe ratios are calculated to 3 digits with far less meaningful data and nobody has much problem with that.

[KrazyHorse]

Sharpe ratios are presented AS SHARPE RATIOS. ****. There is no argument that a sharpe ratio for a given period is what it is. There's a simplistic formula which even an idiot like yourself could understand. Whether or not the Sharpe ratio is a meaningful measure is a wholly separate issue.

Presenting a number that you get out of some macro analysis of food stamps as THE FISCAL MULTIPLIER for food stamps entails a whole host of assumptions which are not present when you report the Sharpe ratio.

Moron.

[Vanguard]

Sharpe ratios are presented AS SHARPE RATIOS. ****. There is no argument that a sharpe ratio for a given period is what it is. There's a simplistic formula which even an idiot like yourself could understand. Whether or not the Sharpe ratio is a meaningful measure is a wholly separate issue.

Presenting a number that you get out of some macro analysis of food stamps as THE FISCAL MULTIPLIER for food stamps entails a whole host of assumptions which are not present when you report the Sharpe ratio.

Moron.

There is no difference, you poor addled chump.

Sharpe ratios are a way to compare different types of private investment.

The food stamp multiplier is a way to compare food stamps to other types of public investment. If food stamps have a higher ratio of economic activity generated compared to, say, guaranteeing condo mortgages in Florida then you choose food stamps over condo mortgages. Exactly the same as a Sharpe ratio.

[Lorizael]

I'm getting ready to change this thread's topic to something more interesting than food stamps in order to reflect the level of vitriol present.

[Dinner]

I think it is very clear that poop is poop.

[KrazyHorse]

vantwat

I'm having trouble believing that even you are this dense.

When a source presents the Sharpe ratio it says "here is the Sharpe ratio for period X". There is no argument about whether or not what they're presenting is actually the Sharpe ratio. There is a formula for what it is in terms of publically available data. Two different analysts will always report the same Sharpe ratio for the same asset over the same period, as long as they don't make a typo.

On the other hand, a fiscal multiplier is defined in terms of a real versus counterfactual world (comparing overall economic activity to that in a world with a slightly different amount of government spending/taxation). There is no way to directly measure the economic activity of a counterfactual. In order to generate estimators of fiscal multipliers economists plug different policy changes into various macro models that they have. Different macro models generate wildly different estimates of the fiscal multiplier of identical policy shifts. Thus Moody's reporting of a single number to 3 sig figs is either naive or disingenuous.

You epic moron.