Saturday, March 12, 2016

This chart shows fiscal expansion is hopeless, Brad Delong

Brad, always proposing the Swamp to spend more.  Statistics will not produce high multipliers from this chart.  This chart has potential GDP growth and debt, the key variables needed to prove fiscal expansion works.  Potential growth goes down in association with more debt, the chart cannot be denied.

Brad, you cannot invent variables that change the past.  Notice, Brad, even at lower zero bound, the potential growth stabilizes when  debt expansion stops.  This is not an economic argument, it is statistics, no economist will get good multipliers as long as this chart represents the recent past. You are stuck, Brad, your methods require the immediate past.  You can spout all the  philosophy you want, but only statistics derived from the relevant past will prove your point, it is not here.

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