Tuesday, November 22, 2011

Scott Sumner has Another Post Debating the Efficacy of Fiscal Stimulus

To me it is a moot point because even if it works even taking the advocates numbers the cost is way too high per job saved/created. It is clearly better to use monetary stimulus combined with a wage subsidy. 

This seems especially true in the current downturn because the lower skilled workers are so much more likely to be out of work. For the people at the bottom of skill levels a wage subsidy is a much cheaper way to create jobs than a stimulus which is likely to have quite a bit of crowding out.  Even Allen Blinder an advocate of the first stimulus has said as much.  


No comments: