Fiscal Multipliers

[Jon Miller]

I recently read an article which argues that the fiscal multiplier for domestic military spending is roughly 1.5.

http://www.economist.com/blogs/democracyinamerica/2011/10/stimulus?fsrc=scn/fb/wl/bl/raisingmilitaryspending

http://www.voxeu.org/index.php?q=node/7056

Is this in argument to engage in domestic military spending, even when 'unneeded' when the government wishes to engage in 'stimulus'?

This also does suggest that the thinking that stimulus spending is impossible is wrong.

JM

[KrazyHorse]

1) no, a fiscal multiplier of 1.5 does not mean that digging ditches and filling them in again is a good idea
2) there is no such thing as "the fiscal multiplier". Under an inflation targeting (or aggregate demand targeting) fiat money regime, a fiscal multiplier significantly different than zero is indicative of a deeply psychotic central bank

[KrazyHorse]

Even more importantly, the article you cited is idiotic, as it ASSUMES THE SAME FALLACY OF COMPOSITION I HAVE MENTIONED TO YOU PREVIOUSLY IN THE CONTEXT OF ANOTHER SUCH STUDY.

Stop acting like a child and think for once, Jon. You've gotten to the point where I doubt your willingness/ability to learn anything about economics.

[DaShi]

GOD DAMN IT, JON!!

[MRT144]

But what if there is coal or oil in those ditches?

[Elok]

Filling them in again is still the EPA's problem.

[MRT144]

What we should do is make a contest of who can dig the deepest ditch and anything found during the ditch digging process is the government's. Dinosaur bones galore!

[Uncle Sparky]

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!!!

[Hauldren Collider]

What we should do is make a contest of who can dig the deepest ditch and anything found during the ditch digging process is the government's. Dinosaur bones galore!

We can call it digball, and give out university scholarships, play it on tv and sell jerseys. Suddenly, not the broken window!

[Egbert]

1) no, a fiscal multiplier of 1.5 does not mean that digging ditches and filling them in again is a good idea

Very good idea if you happen to have a cost plus government contract to that. Guaranteed profits.

[Dinner]

1) no, a fiscal multiplier of 1.5 does not mean that digging ditches and filling them in again is a good idea
2) there is no such thing as "the fiscal multiplier". Under an inflation targeting (or aggregate demand targeting) fiat money regime, a fiscal multiplier significantly different than zero is indicative of a deeply psychotic central bank

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.

[MRT144]

We can call it digball, and give out university scholarships, play it on tv and sell jerseys. Suddenly, not the broken window!

Yes!

[Hauldren Collider]

You could also play the sport at juvenile detention facilities, like in that horrible children's novel they made a movie from.*

*One of many but you know the one I mean. I don't want to refer to it by name.

[giblets]

You could also play the sport at juvenile detention facilities, like in that horrible children's novel they made a movie from.*

*One of many but you know the one I mean. I don't want to refer to it by name.

Horrible? Really?

[Jon Miller]

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.

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.

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.

It is interesting to discuss the effect of government spending, decoupled from other effects (most important, monetary effects). The article/study attempts to do this. It provides data that goes against the hypothesis that the effect of government spending is negative or zero in the case of domestic military spending.

JM