tag:blogger.com,1999:blog-4900303239154048192.post1786300498576660685..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: Could Someone Let Robert Lucas Know That The Balanced Budget Multiplier Is Not Zero?Unknownnoreply@blogger.comBlogger6125tag:blogger.com,1999:blog-4900303239154048192.post-71726440712481971512009-04-07T15:44:00.000-04:002009-04-07T15:44:00.000-04:00You don't get any multiplier effect from tax-finan...You don't get any multiplier effect from tax-financed spending, at least not so long as the mpc of those being taxed is the same as the mpc of those receiving the spending. If the government levies a lump-sum tax of G on one group of people with multiplier m1, and gives that money to another group with multiplier m2, then the multiplier effect will be m2*G - m1*G.<BR/><BR/>Now if the government gives that money on condition of building a bridge, you do get the bridge. Whether that's worth while depends on the value of the bridge and the value of the other activities you crowded out.<BR/><BR/>To the extent that expected future taxes depress spending, deficit-financed spending is no different. Which is to say, not perfectly.Jonnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-15422742051072448752009-04-07T13:33:00.000-04:002009-04-07T13:33:00.000-04:00There is plenty of room for growth in our economy,...There is plenty of room for growth in our economy, plenty of poor people. If there was a way to multiply them to prosperity then it would be irresponsible not to do it. <BR/><BR/>Trucker your comment is basically the other side of the same coin as the righty we're supposed to be putting down. The government only gets the money to deficit spend by selling a bond. Either that bond gets paid off by future taxes (righty) or future inflation. <BR/><BR/>Either way it will retard growth, by raising the risk to investment, unless what the government spends it on will result in a higher rate of growth. Nobody will make that claim though because it involves business decisions, and stimulus spending (supposedly) solved the Great Depression by buying tanks and bombs (which nobody wanted), so you really should be able to spend the money anywhere. <BR/><BR/>The theories in favor of a stimulus multiplier are so confused that even those in favor can't agree on them. That is why the stimulus bill was not written by believers in the multiplier, but by people who wanted to spend money on liberal programs.wellbasicallynoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-87274204272156911062009-04-07T11:23:00.000-04:002009-04-07T11:23:00.000-04:00wellbasically said... "So why doesn't the governme...wellbasically said... <BR/>"So why doesn't the government just run a $20 trillion dollar deficit if it's going to multiply?"<BR/><BR/>For the same reason that if your doctor gives you a prescription and tells you to take 3 pills per day, taking 30 per day won't help you get well faster.<BR/><BR/>Anonymous said... <BR/><BR/>"Whatever gave you that idea? There is no evidence at all that Lucas has any understanding of evidence based macroeconomics."<BR/><BR/>Brad DeLong has been posting examples of allegedly elite econopeople saying some very dumb things. It's no longer a case of questioning the right's theories or models, but that the right is lying, pure and simple.<BR/><BR/>-BarryAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-50824614922850625102009-04-06T16:46:00.000-04:002009-04-06T16:46:00.000-04:00I thought Robert Lucas had a very strong grasp of ...<I><BR/>I thought Robert Lucas had a very strong grasp of macroeconomics – maybe not<BR/></I><BR/><BR/>Whatever gave you that idea? There is no evidence at all that Lucas has any understanding of evidence based macroeconomics.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-30115536373981549212009-04-06T14:07:00.000-04:002009-04-06T14:07:00.000-04:00Wellbasically,The government cannot run too big a ...Wellbasically,<BR/><BR/>The government cannot run too big a deficit or the government's money will be made worthless in the near term. The repayment of dept in inflated dollars has its limits. The objective is to feed the economy only the amount it can swallow at a gain. To improve infrastructure is good. To create unneeded and unprofitable infrastructure can result in a total meltdown of the currency. If the currency loses its capacity to direct labor then the game is over.<BR/><BR/>PGL,<BR/><BR/>If you believe that the wikipedia article on Richardian Equivalence is wrong then why not fix it? My own interpretation is that the article is right in that it describes "Ricardian Equivalence". The fact that "Ricardian Equivalence" is horsecrap is not a shortcoming of wikipedia. The article seems to do a pretty fair job of exposing the shortcomings of the theory. So what did I miss?TheTruckerhttps://www.blogger.com/profile/10346127768102862741noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-74575731270765358782009-04-06T12:42:00.000-04:002009-04-06T12:42:00.000-04:00So why doesn't the government just run a $20 trill...So why doesn't the government just run a $20 trillion dollar deficit if it's going to multiply?wellbasicallynoreply@blogger.com