Wednesday, February 9, 2011

So It Would Have Been Cheaper Just To Give Everyone Cash?

Did the Stimulus Stimulate? — Mises Economics Blog: (quoting NBER Working Paper No. w16759)

A cross state analysis suggests that one additional job was created by each $170,000 in stimulus spending. Time series analysis at the state level suggests a smaller response with a per job cost of about $400,000. These results imply Keynesian multipliers between 0.5 and 1.0, somewhat lower than those assumed by the administration... Grants to states for education do not appear to have created any additional jobs. Support programs for low income households and infrastructure spending are found to be highly expansionary. Estimates excluding education spending suggest fiscal policy multipliers of about 2.0 with per job cost of under $100,000.

In other words, it would have been cheaper just to give everyone cash up-front, say $40,000/person/year, and let them spend it and thus produce a non-mythical Keynesian multiplier. DOH!!! (But as the Instapundit would say, "less opportunity for corruption.")

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