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Article Artículo

A Tale of Two Graphs
In an interview published Sunday, the US Treasury’s Chief Economist Alan Krueger told the Financial Times that: “The jobs situation – as difficult as it is – has actually started to improve earlier than in the last two recoveries.”Today, Ezra Klein picked

John Schmitt and John Schmitt / September 15, 2010

Article Artículo

Casey at the Blog: Joy in Recession Land
Maybe the boys and girls in Congress will never muster the will to provide the stimulus to get the economy moving. Perhaps Bernanke and the Fed crew will never get over their fear of inflation even as it turns to deflation. And, Washington politicians are too macho to say that we actually need the dollar to fall (i.e. a weak dollar) to get our trade deficit in line.

But, at least we have the pleasure of watching the leading lights of the anti-stimulus crew flailing in the cyberspace of the NYT, trying to pretend that their case makes sense. And no one does this better than University of Chicago economist Casey Mulligan.

Professor Mulligan thinks that he can show that stimulus does not work by examining the job impact of the workers temporarily employed to carry through the 2010 Census. Mulligan notes the assumption of stimulus proponents that the there would be a multiplier effect of 1.6 for each job directly created by the stimulus. This means that for every person directly employed as a result of stimulus spending there would be 0.6 jobs created as a result of the spending out of this worker’s wages.

Mulligan applies this arithmetic to the hiring of temporary Census employees earlier this year. Census employment peaked at just under this 600,000. The 0.6 multiplier would imply a jump in 360,000 non-Census related jobs. Mulligan looks at the data and cannot find any evidence of this sort of jump and believes that he has an important piece of evidence against the stimulus.

CEPR / September 15, 2010