Jump to content
House Price Crash Forum
interestrateripoff

Fiscal Stimulus Doesn't Work, Claims Harvard Economics Professor Robert Barro

Recommended Posts

http://www.telegraph.co.uk/finance/economics/8618623/Fiscal-stimulus-doesnt-work-claims-Harvard-economics-professor-Robert-Barro.html

Breaking with current economic orthodoxy, Robert Barro, Paul M Warburg Professor of Economics at Harvard University, said large spending plans should be undertaken only if they can be justified financially on their own merits. Any other spending plans end up costing the country even more than the initial outlay as interest on the debt has to be paid and the deficit cleared.

"In the long run you have got to pay for it. The medium and long-run effect is definitely negative. You can't just keep borrowing forever. Eventually taxes are going to be higher, and that has a negative effect," he said.

"The lesson is you want government spending only if the programmes are really worth it in terms of the usual rate of return calculations. The usual kind of calculation, not some Keynesian thing. The fact that it really is worth it to have highways and education. Classic public finance, that's not macroeconomics."

Turning to the $600bn (£373bn) to $800bn US package, he added it was "mainly a waste of money". Stimulus programmes, he said, offer little more than "rearranging the timing" of economic growth. "Possibly you could make an argument that it's worth it. But it's going to be a negative-sum thing overall, so you have to think it's a big benefit for boosting the recovery."

His comments, made to The Telegraph ahead of delivering the Institute of Economic Affairs Annual Hayek Memorial Lecture...

Mr Barro argued that, taken over the long term, for every £1 spent, the cost to the economy will be more than £1 – creating what he called a negative fiscal multiplier. Orthodox thinking is that current stimulus programmes have a positive multiplier effect by creating growth.

He acknowledged, however, that there are times when stimulus programmes are needed – such as in the recent recession. But he said they should be delivered through necessary capital projects and tax cuts, to deliver required services and make the economy more efficient.

Is it the press attacking Keynes here or Barro? I'm pretty sure that Keynes would have agreed you can't borrow forever. Keynes get out of jail free card was only to be used once, to end the depression not to continually deficit spend especially during the boom if you're deficit spending your not saving the surplus. It's amazing no one in academia will actually state this.

Barro appears to be ignoring politics here, big spending plans are great for the leaders ego. It costs lots of money, will look very shiny when finished and they get to have their picture taken with it.

He's also giving a lecture at a Hayek memorial lecture and thinks it's a good idea to admit that stimulus programmes are needed :unsure::unsure::rolleyes: I'm sure Hayek would have loved that idea. I really can't think of a better location to make that statement.

Share this post


Link to post
Share on other sites

The stimulus is certainly working, it's keeping the bankster bonuses up at a satisfactory level, that's all that counts, really.

Share this post


Link to post
Share on other sites

http://www.telegraph.co.uk/finance/economics/8618623/Fiscal-stimulus-doesnt-work-claims-Harvard-economics-professor-Robert-Barro.html

Is it the press attacking Keynes here or Barro? I'm pretty sure that Keynes would have agreed you can't borrow forever. Keynes get out of jail free card was only to be used once, to end the depression not to continually deficit spend especially during the boom if you're deficit spending your not saving the surplus. It's amazing no one in academia will actually state this.

Barro appears to be ignoring politics here, big spending plans are great for the leaders ego. It costs lots of money, will look very shiny when finished and they get to have their picture taken with it.

He's also giving a lecture at a Hayek memorial lecture and thinks it's a good idea to admit that stimulus programmes are needed :unsure::unsure::rolleyes: I'm sure Hayek would have loved that idea. I really can't think of a better location to make that statement.

Excellent, thanks.

This part was great:

"The lesson is you want government spending only if the programmes are really worth it in terms of the usual rate of return calculations. The usual kind of calculation, not some Keynesian thing.

:lol:

And there is another crucial consideration: If a stimulus takes a country's total debt to a level where its financing costs (IR) will go up, then the extra future cost will be even bigger.

That is the main difference between the coalition's and Labour's deficit reduction plans. With Labour's we would take our total debt above 100% of GDP, in 7? or 8 years?, and refinancing would be crippling.

.

Edited by Tired of Waiting

Share this post


Link to post
Share on other sites

He's also giving a lecture at a Hayek memorial lecture and thinks it's a good idea to admit that stimulus programmes are needed :unsure::unsure::rolleyes: I'm sure Hayek would have loved that idea. I really can't think of a better location to make that statement.

I and some friends were at the lecture. HE IS A KEYNESIAN though he pretends he is not. He supports bailing out TBTF banks.

He is in no way contrarian. Last night's lecture in the name of HAYEK was a disgrace. he said there is no inflation in the US which I challenged with 'have you bought gas or food recently' he pointed to govt stats which show no inflation. Think about it.

#banbankbailouts #bankeynsians

Share this post


Link to post
Share on other sites

I and some friends were at the lecture. HE IS A KEYNESIAN though he pretends he is not. He supports bailing out TBTF banks.

He is in no way contrarian. Last night's lecture in the name of HAYEK was a disgrace. he said there is no inflation in the US which I challenged with 'have you bought gas or food recently' he pointed to govt stats which show no inflation. Think about it.

#banbankbailouts #bankeynsians

It becomes immediately apparent why he made Prof.

It would appear having certain sociopath tendencies is a prerequisite.

http://www.mcafee.cc/Bin/sb.html

Pathological Lying

Has no problem lying coolly and easily and it is almost impossible for them to be truthful on a consistent basis. Can create, and get caught up in, a complex belief about their own powers and abilities. Extremely convincing and even able to pass lie detector tests.

Share this post


Link to post
Share on other sites
He acknowledged, however, that there are times when stimulus programmes are neededsuch as in the recent recession

Perhaps he ought to make his mind up.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.