Fiscal stimulus doesn’t work
Posted by Warren on August 7, 2008
Our tax dollars
Harvard economist Marty Feldstein wrote a great piece in the
Wall Street Journal today about why fiscal stimulus (including the last rebate and Obama’s plan) does not work.
Marty, as usual, is right on the money. Fiscal stimulus suffers from a significant time lag to its impact on the economy (if there is one), stimulus checks are often saved not spent, and stimulus can be inflationary. And so the doom and gloom for the US economy continues….
The Insolvent Investor 
Nina said
It does not take a Harvard economist, though, to tell us that this year’s fiscal stimulus did not have the intended effects. But for those who push for it in the first place, it certainly can work, at least in the short term, as the intended purpose is political gains for being perceived as doing something about our troubles.
wbuffettjr said
While I agree with you, I do not think this view is widely held or understood. Many articles were published ex-post that seemed to support the view that the stimulus was effective:
http://www.portfolio.com/news-markets/national-news/reuters/2008/07/30/stimulus-effective-in-lifting-spending-study