Thursday, February 28, 2013

Labs for Testing Fiscal Policy Positions

One economist says one thing, another economist says the opposite, if only we could test their theories and figure out which is right. Oh yeah, we can…

Labs for Testing Fiscal Policy Positions "But as it happens, economists have increasingly been using regions within the United States as labs of democracy, measuring contrasting approaches in various states to determine both why the recovery is sluggish and what to do about it."

Guess what they came up with?

"they found almost no relationship between job growth and the share of small businesses that cite regulation and taxes as their top concern. (Rather, they found a strong correlation between weak job growth and complaints of a lack of demand.)"

"The findings showed that focused fiscal relief during hard times can effectively stimulate employment. An important and timely implication of this finding is that the contrary policy of cutting spending during hard times can reduce employment."

"I find that modestly sized tax increases on upper-income taxpayers have a negligible to small impact on job creation. These magnitudes are much smaller than those of cutting government spending in hard times."

Shocking! Oh right, it's not.

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