Tuesday, September 22, 2009

Government Failure: The Stimulus Didn't Work (Now Wait for the Bill to Arrive)

Economists Cogan, Taylor and Wieland explain the administration's stimulus fiasco in this WSJ article (HT Escolhas e Consequência). Here's their main point:
Incoming data will reveal more in coming months, but the data available so far tell us that the government transfers and rebates have not stimulated consumption at all, and that the resilience of the private sector following the fall 2008 panic--not the fiscal stimulus program--deserves the lion's share of the credit for the impressive growth improvement from the first to the second quarter. As the economic recovery takes hold, it is important to continue assessing the role played by the stimulus package and other factors. These assessments can be a valuable guide to future policy makers in designing effective policy responses to economic downturns.

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