The Stimulus Is A Failure

[Vanguard]

No. Wrong.

This is all really fairly simple. Zandi says that if we give poor people a dollar of food stamps this will generate an average of $1.74 of economic activity. That is his expert opinion, given to Congress under oath.

Period. It is just that simple. There is no need for BS about "assumptions underlying the model". His testimony is that it applies to our economy. The assumptions underlying the model are: US, Earth, Humans, Now.

Since it is an average already, there is no need for a "confidence range". If we do it, here in the US, now, in current conditions, it will work as stated. Each dollar of food stamps will generate an average of $1.74 of economic activity.

Now, Zandi may wrong. Or he may be right. But the fact that his multiplier has a whopping 3 digits (!) has no bearing on that.

That said, there is also no reason to doubt the general accuracy of his conclusions either. Food stamps do seem to be one of the best ways to generate quick economic activity. Since there is no reason to horde them, they are spent immediately. Since they are used by the poor, the cash not spent on food is spent immediately on consumption. And since food stamps are disproportionately traded with people who are also relatively poor, the effects of this activity multiply.

[Kuciwalker]

Period. It is just that simple. There is no need for BS about "assumptions underlying the model". His testimony is that it applies to our economy. The assumptions underlying the model are: US, Earth, Humans, Now.

you have no idea what you're talking about

Question: how did he arrive at that figure?

[KrazyHorse]

But IT WAS UNDER OATH, Kuci.

[KrazyHorse]

vantard, you are a barely literate buffoon.

The fact that I belong to the same species as you do makes me nauseous.

[KrazyHorse]

All hail the great Zandi. He is the one who is. His expert opinion is all I need. Only denialists of his power will require him to submit his methods for examination, or will pay attention to the fact that other economists using different methodologies come up with wildly different answers for identical policies.

[Solomwi]

Sorry, KH. It's part of the Congressional Record now. Your silly little arguments are thus mooted.

[KrazyHorse]

[Aeson]

If you give me a $million (or more), I can generate $trillion (1000000x) in economic activity. Don't believe me? I'm willing to prove it....

[Vanguard]

There can sometimes be systematic errors that you don't understand. Then you publish your data with the correct significant figures for the uncertainty that you present, but you mention (if you can) what other possible systematic uncertainty exists and try to estimate it's size.

We have this all the time in experimental science.

JM

Fair enough. I did not mean to imply that any economist who differs about multipliers was actually clueless. I was just using Kuciwalker's own words for rhetorical effect.

Of course, this does not change the fact that there is nothing wrong with 3 digits in Zandi's multiplier.

[KrazyHorse]

Are you seriously retarded? There is nothing wrong with an economist reporting three sig figs as the answer he gets when he applies a given methodology (though he should also have a confidence interval EVEN FOR A GIVEN METHODOLOGY)

On the other hand, there is something TERRIBLY wrong with a reporting and analysis service like Moody's simply printing that the fiscal multiplier is blah.



You ****ing dimwitted noncritical thinking ****.

[KrazyHorse]

And that amount is presumably measurable by following the food stamp dollar as it works its way through the economy.

Missed this before. Are you ****ing kidding me? How exactly would you plan on doing this? Tiny tracking devices in currency?

[KrazyHorse]

Oh, and Jon: the problem is not merely systematics. The real problem is that you need a macroeconomic model in order to back out the fiscal multiplier of various policies from the set of measured variables. Different models lead to wildly different estimators of the fiscal multiplier (at least, this is the state of the art as I understand it).

So there is model uncertainty in the result, even if you're able to control the statistical and systematic errors in the input.

[KrazyHorse]

I see you lurking. Post something so that I can mock you some more.

[Vanguard]

Are you seriously retarded? There is nothing wrong with an economist reporting three sig figs as the answer he gets when he applies a given methodology (though he should also have a confidence interval EVEN FOR A GIVEN METHODOLOGY)

On the other hand, there is something TERRIBLY wrong with a reporting and analysis service like Moody's simply printing that the fiscal multiplier is blah.



You ****ing dimwitted noncritical thinking ****.

The whole point of generating a list of multiplier values for different policy options (such as issuing food stamps or spending on roads) is to reduce the effect of those policies on economic activity to a single, easy to compare number.

If you need a confidence interval on top of that number, then you have generated the multiplier number incorrectly.

The purpose of the multiplier number is comparison.Higher numbers yield more economic activity. Period. No other prediction is meaningful.

Are there possible outcomes where a lower multiplier generates more activity than a higher multiplier? Of course. But that is just noise. If we were going to choose only one single form of stimulus, and then spend trillions of dollars on it, then confidence might be important.

But we are not going to do that. The purpose of this multiplier is to establish relative priority of stimulus policies. Unless the numbers were tightly grouped (which they are not), no purpose is served by adding a confidence number or range.

Zandi and Barrons both used the number in this manner, as an index for comparison. There is nothing wrong with Zandi's precision, even though he may not be accurate.

On the other hand, there is no reason to think it isn't accurate, especially in the short run. Which is what we are concerned with.

[Jon Miller]

Oh, and Jon: the problem is not merely systematics. The real problem is that you need a macroeconomic model in order to back out the fiscal multiplier of various policies from the set of measured variables. Different models lead to wildly different estimators of the fiscal multiplier (at least, this is the state of the art as I understand it).

So there is model uncertainty in the result, even if you're able to control the statistical and systematic errors in the input.

For experimentalists, we consider model dependence to be a systematic uncertainty.

JM