by the Sandwichman
It's official. Big fiscal stimulus package is the flavor of the day! Let's get fiscal, fiscal. I wanna get fiscal. Let's get into fiscal. Let me hear your money talk, your money talk, Let me hear your money talk.
Sandwichman was wondering, though, "how do they get from $X billion of fiscal stimulus to X million jobs created?"
Dean Baker must have been reading my mind. "Assuming that employment is roughly proportional to output..."
Is that all there is?
Percent of GDP in additional government spending times multiplier equals percent increase in GDP and -- assuming an employment effect roughly proportional to output -- equals percent increase in employment?
Is that actually how economists estimate the employment effect of a fiscal stimulus package? Because if it is, the old Sandwichman has news for you economist folks:
EMPLOYMENT IS NOT ROUGHLY PROPORTIONAL TO OUTPUT.
But you already knew that, didn't you?