The San Francisco Fed on the Effectiveness of the Stimulus Plan

by: Tyler Durden

San Francisco Fed providing their 2 cents on classical Keynesian economics as pertains to the efficacy of the $787 billion Obama Stimulus Plan. In summary: "The uncertainty ... remains high. Several economists remain skeptical that fiscal multipliers—whether from spending or taxes—are very large (see, for instance, Barro 2009). Moreover historical relationships may prove much less reliable during this downturn. Faced with a large decline in wealth and tight credit availability, households may very well respond differently to tax cuts today than they have in the past."

Of course, having surrounded himself by Keynesians (and TurboTax experts), Obama has little choice. Unfortunately, our economy is a real-time experiment in the applicability of a goal-seeked theory.

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