Fiscal Multipliers

[KrazyHorse]

1) No one is suggesting that but building up military stock piles, updating equipment, or buying new equipment does fulfill a constitutionally mandated responsibility of the Federal government (and indeed even state governments) plus the equipment stays good for 20 years or more so even if it isn't immediately needed it's no where near a complete waste like digging holes & filling them in.

2) Yes there is. We're simply speaking about spending in a certain area brings about knock on or additional spending as a result.

It's not merely that you are wrong, it's that you don't even understand my response.

[Egbert]

Can you go back to spouting ideological socialist claptrap instead of ideological market claptrap please? tah.

[KrazyHorse]

Re: KH

1. I do learn something from economics discussions on apolyton, and my opinions have changed based on them. That is why I continue to engage in them.

No, you haven't even learned the most basic thing about macro that I've explained to you (the fallacy of composition).

2. If you had read and thought about the article/study I referenced, you would know that ditch digging/filling was not what was being discussed here. What is claimed to have a fiscal multiplier of >1.5 is domestic military spending, namely the design and construction of military devices and the training and basing of soldiers. All of this in a market where the government provides all the demand. If you respond to the study/paper, then we can also discuss what this means with respect to certain types of infrastructure spending.

Holy ****, you plodder:

Is this in argument to engage in domestic military spending, even when 'unneeded'

Learn to recognize when somebody is using a ****ing metaphor. If the spending is "unneeded", yet should be made then I assume you are asserting that the macroeconomic effects of the spending are enough to justify it. If that's the case, then we might as well talk about digging ditches and filling them in again. Now, are you happy that you made me waste 3 minutes of my time composing that instead of ****ing thinking for one ****ing second about it and deciphering it yourself?

3. If you had read and thought about the article/study I referenced, you would see that they have a clever way to decouple stimulus from the actions of the central bank. Obviously the central bank can act to ****** the stimulus, and so if a national stimulus was desired, the government would have to act partnered with the central bank.

The article you referenced does no such ****ing thing, you utter ******. It merely engages in the fallacy of composition.

This is now the third time I've pointed out to you why any study which claims to decipher macro effects from regional variations is idiotic.

[Jon Miller]

According to the market, isn't all military spending 'unneeded'? The government decides how much is needed, independent of market factors.

So no, military spending isn't at all like filling a ditch/digging it again.

You claim that it is engaging in the fallacy of composition. Care to give any support to your claim?

JM

[KrazyHorse]

No, military spending is the classic example of a ****ing public good. This is what is called a market failure. This is why government must provide it (or at least intervene in some other way). The determination of how much military spending is needed cannot possibly come from "the market" (where I assume you mean the amount of military spending that individuals would purchase with their own money for the protection of the country at large; if you want to hypothesize other markets, e.g. demand-revealing referenda etc then we can). Note that this is also a strawman, as you're the one who postulated the "unnecessary" bit. Nobody talked about how we determined what was needed and what was not until you just began arguing against a position that I never took.

The evidence that they engaged in the fallacy of ****ing composition is that they attempted to study the effect on US-wide GDP of military spending by utilizing regional variations in military spending and regional variations in output growth. This is a blatantly ridiculous methodology.

Let's you have a country composed of two identical regions (A and B) and you increase government spending in region A by 1%. Let's also say that this causes GDP in A to go up by 0.75% and in region B to go down by 0.75%. What does your inter-regional regression tell you? What is the "real" fiscal multiplier?

As I said: think first, Jon. This is not ****ing rocket science.

[KrazyHorse]

If the ditches are filled with Crackberries, then filled in, that would stimulate the economy... and if they were buried with the lawyers, bankers and economists who owned them, so much the better!!!

The first thing we do, let's kill all the lawyers.

You have a proud tradition behind you, sparky...

[Jon Miller]

That would mean that spending on military by the government in country A by 1% will increase GDP growth by 1.5 relative to GDP growth in neighboring country B. In essence, providing an effective 'fiscal multiplier' of 1.5. In some situations, this would be a better way to increase GDP growth in country A than lowering corporation tax rates, providing subsidies, removing labor restrictions, or other mechanisms that governments use to encourage GDP growth.

And I know that you don't like these (well, except the lowering corporate tax rates). But it doesn't mean that they don't have real effects on GDP growth of a specific country.

JM

[Ogie Oglethorpe]

That would mean that spending on military by the government in country A by 1% will increase GDP growth by 1.5 relative to GDP growth in neighboring country B. In essence, providing an effective 'fiscal multiplier' of 1.5. In some situations, this would be a better way to increase GDP growth in country A than lowering corporation tax rates, providing subsidies, removing labor restrictions, or other mechanisms that governments use to encourage GDP growth.

And I know that you don't like these (well, except the lowering corporate tax rates). But it doesn't mean that they don't have real effects on GDP growth of a specific country.

JM

Read the problem statement again. The hypothetical posed two identical regions, A & B within a single country (not two separate countries embarking on a different policies). While one (A) received + 1% GDP spending the other (B) did not. The effect KH was attempting to describe is that A increased by 0.75% and B decreased by 0.75%, holistically for the country then the GDP netted to 0 for this set of actions.

[Jon Miller]

I understood that.

I was pointing out that if it is a relative effect, like if the effect is to move investment/etc in one region to another, then that is still good for the country which wishes to engage in stimulus. It is still something that it might wish to choose, perhaps above lowering the tax rate or increasing subsidizes to corporations (other ways that a country encourages growth to happen in their country (versus another country)).

So even in KH's case, it is still a relevant study/doe not obviously fail due to the fallacy of composition.

JM

[giblets]

I understood that.

I was pointing out that if it is a relative effect, like if the effect is to move investment/etc in one region to another, then that is still good for the country which wishes to engage in stimulus. It is still something that it might wish to choose, perhaps above lowering the tax rate or increasing subsidizes to corporations (other ways that a country encourages growth to happen in their country (versus another country)).

So even in KH's case, it is still a relevant study/doe not fail due to the fallacy of composition.

JM

The problem here is that Krazyhorse seems to be claiming that fiscal stimulus is worthless because the central bank will counter whatever effect a change in government spending would have on GDP. For a country like the United States, which doesn't share its central bank with anybody, this would mean that government spending doesn't allow the US to poach anyone else's output.

edit: I forgot Ecuador uses the dollar as its currency, so maybe increasing government spending would take away some of Ecuador's output and give it to the US. **** 'em.

[Jon Miller]

The problem here is that Krazyhorse seems to be claiming that fiscal stimulus is worthless because the central bank will counter whatever effect a change in government spending would have on GDP. For a country like the United States, which doesn't share its central bank with anybody, this would mean that government spending doesn't allow the US to poach anyone else's output.

I already pointed out that that isn't relevant.

It is not useful to obfuscate the issue.

It is useful to try to tease out different effects, and see if your model can reproduce the results. Just like in Physics we measure form factors/etc/etc, since we can't measuring quark 1/quark 2/gluon 1/etc/etc/etc. Yes, we are excluding the monetary effects, because that is what we are trying to do. We already know that monetary effects are very strong, no one disagrees with that (and there are other studies which seek to measure them). What this study seeks to measure is the relative fiscal multiplier.

For those who are interested, here is the paper direct:

http://www.columbia.edu/~en2198/papers/fiscal.pdf

They, of course, use better language than I.

JM

[KrazyHorse]

dp, but I should leave it because it deserves to be repeated

[KrazyHorse]

I understood that.

I was pointing out that if it is a relative effect, like if the effect is to move investment/etc in one region to another, then that is still good for the country which wishes to engage in stimulus. It is still something that it might wish to choose, perhaps above lowering the tax rate or increasing subsidizes to corporations (other ways that a country encourages growth to happen in their country (versus another country)).

You are officially as stupid as ben kenobi. Congratulations on failing reading, you ****ing idiot.

You can't measure the effect of fiscal stimulus on the US economy by asking what happens to the relative output of individual regions when relative regional spending by the feds changes.

I have less than no respect for your intelligence (or intellectual honesty) right now.

[KrazyHorse]

Yes, we are excluding the monetary effects

No, they are actually excluding all macroeconomic effects, thereby engaging in the ****ing elementary fallacy of composition. For example (among other things), they are also excluding any possible effect of ricardian equivalence. If the feds spend an extra dollar in california, california's future tax burden only increases by 10 cents.

Talking to you is like talking to a dishonest brick wall. To repeat: you are no better than ben kenobi.

[Jon Miller]

No, they are actually excluding all macroeconomic effects, thereby engaging in the ****ing elementary fallacy of composition. For example (among other things), they are also excluding any possible effect of ricardian equivalence. If the feds spend an extra dollar in california, california's future tax burden only increases by 10 cents.

They show the what the results would be in certain subsets of all possible theoretical frameworks. Ricardian equilvalence is not part of every framework (and is in fact controversial), data analysis is still relevant which does not include it.

Where you able to discuss physics experimental results when you were still in physics? Or did you call them idiotic because they didn't consider the possibility of a charged higgs/etc/etc when they presented results?

JM