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Tuesday, June 19, 2012

You gotta love this guy...this is the correct way to think about stimulus spending.

http://johnhcochrane.blogspot.com/2012/06/i-almost-agree-with-summers.html?utm_source=feedburner

4 comments:

Ashton said...

"The question is, Are there indeed sizeable positive real return projects that our government can, and will, invest in, and realize positive returns?"

Is this a fair question to ask of our government? As I understand it, though perhaps I'm truly naive, our government is not an investment firm.

Randall Parker said...

It is positively the correct question. Running deficits and "stimulating" only makes economic sense when the social return is greater than the interest rate on the debt. That is the case that must be made. Anything less than that and you are basically telling the tax payers to just give me the money, go back to work and shut your mouth. Actually, that sounds about right doesn't it?

Anonymous said...

Dr, while I agree with your comment in theory, I would ask you to please quantify any "social return" - that's a joke. We can't even get economists to agree on to spend or not spend..... coming in the same ballpark of a completely arbitrary metric such as "social return" is far too much to ask from the discipline.

Randall Parker said...

There needs to be some cost-benefit metric used in deciding what is and is not useful spending. If we can't do that then it is arbitrary, which is what it pretty much is now.