tag:blogger.com,1999:blog-4900303239154048192.post8271039985101919425..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: Government Purchases Versus Government SpendingUnknownnoreply@blogger.comBlogger9125tag:blogger.com,1999:blog-4900303239154048192.post-3621987754456747262013-02-05T19:11:23.435-05:002013-02-05T19:11:23.435-05:00"Can you explain your rationale, in that I un..."Can you explain your rationale, in that I understand government spending is an integral part of GDP." Don - take a mini course in national income accounting. Consumption + investment + net exports + goverhment purchases. Which does not include transfer payments.<br />ProGrowthLiberalhttps://www.blogger.com/profile/17138489390594441753noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-65628453528602296502013-02-05T16:55:49.835-05:002013-02-05T16:55:49.835-05:00I perused the paper. Key conclusion: "The p...I perused the paper. Key conclusion: "The primary failure of fiscal policy to be expansive in this period is attributable to the sharp increase in tax structures enacted at all levels of government." Whoa. Well then, we're already off to a very bad start for 2013--lot's of new taxes of all flavors. But importantly, transfers are negative taxes. Brown is concluding that negative taxes are expansionary. Pls expound on your take-aways from this work, in a little more detail. Thx.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-32352794125360081842013-02-05T16:52:41.325-05:002013-02-05T16:52:41.325-05:00"Taxes can fall and transfer payments can ris..."Taxes can fall and transfer payments can rise without any change in fiscal policy," writes Pro Growth Liberal. If revenue falls and expenses rise, then the deficit increases. Does the increased deficit mean the fiscal policy is the same? If so, what policy has changed to indicate the increased deficit?<br />"The increase in federal spending was due to an increase in transfer payments that did not lead to an increase in GDP," writes Barkley.<br />Can you explain your rationale, in that I understand government spending is an integral part of GDP.<br />Don LevitDon Levithttps://www.blogger.com/profile/02497731736648561272noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-51063704693889828122013-02-05T16:09:04.399-05:002013-02-05T16:09:04.399-05:00Anthony - try reading E. Cary Brown's 1954 Ame...Anthony - try reading E. Cary Brown's 1954 American Economic Review paper on how changes in the deficit are not always the same as fiscal impact. It is a must for anyone who wants to understand macroeconomics. Simply put - taxes can fall and transfer payments can rise without any change in fiscal policy as they also depend on the state of the economy. I tried to make that point earlier but I guess you missed it. ProGrowthLiberalhttps://www.blogger.com/profile/17138489390594441753noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-67652063740856181242013-02-05T11:38:59.190-05:002013-02-05T11:38:59.190-05:00Ok, fair enough. But the taxpayer finances govern...Ok, fair enough. But the taxpayer finances government **outlays** (now, or in the future). Government outlays have grown; this is no meme here, but rather an accounting identity. This administration cannot have its cake and eat it: either outlays in the form of transfer payment ARE stimulative, or they are not stimulative. If they ARE stimulative, then there is NO austerity. (As if austerity has a non-partisan defn, which it does not.)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-83302482618076908022013-02-05T11:13:13.977-05:002013-02-05T11:13:13.977-05:00Anthony - no one (outside of the most ardent Barro...Anthony - no one (outside of the most ardent Barro-Ricardian types) said changes in transfer payments to borrowing constrained households won't affect consumption - an indirect effect. Barkley's comment was that there was no direct impact. What I'm saying is that capturing fiscal impact from policy changes requires one to segment out the impact of changes in income on actual expenditures (something else not done in the rightwing oped that Barkley critiqued). ProGrowthLiberalhttps://www.blogger.com/profile/17138489390594441753noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-38328433835844449542013-02-05T10:56:38.690-05:002013-02-05T10:56:38.690-05:00Hmm. But Pelosi, Reid, Obama et al told us those ...Hmm. But Pelosi, Reid, Obama et al told us those transfer payments DO grow GDP. Remember that propensity-to-consume/fat multiplier at the ZLB thingy? Remember that food stamps have a multiplier of 1.8-ish? Are you saying at present, only DIRECT govt purchases have a multiplier of greater than unity? Tread carefully thinking through this, lest you get your intellectual underpants all wadded-up.<br /><br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-7923295033299839002013-02-05T09:04:56.949-05:002013-02-05T09:04:56.949-05:00Nolte uses quarterly observations as to Federal ou...Nolte uses quarterly observations as to Federal outlays to claim there was some sort of fiscal stimulus but as I look at the actual Treasury figures, I have to wonder if there is some sort of seasonality to transfer payments going on. Not that I've done the hard work to demonstrate this but he hasn't looked into this possibility either. ProGrowthLiberalhttps://www.blogger.com/profile/17138489390594441753noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-6612858974097031082013-02-05T08:49:18.736-05:002013-02-05T08:49:18.736-05:00In an ideal world, one would report the entire fis...In an ideal world, one would report the entire fiscal impact of changes in fiscal policy (purchases, transfer payments, and taxes). One problem is that a lot of the changes in transfer payments and taxes are not changes in policy but automatic stabilizers (during recessions spending rises and taxes fall and during booms the converse occurs). Of course, the other issue (which you allude to) is that even policy changes in net taxes often have a less than one for one impact on consumption demand. In fact, Barro Ricardian equivalence types might argue that there is no impact on consumption (albeit this indeed is valid at best for only certain households). ProGrowthLiberalhttps://www.blogger.com/profile/17138489390594441753noreply@blogger.com