Stimulus timing

For travel reasons, I won't get a chance to read through this right away, but here is a CBO report on the stimulus. (and this time the real report)  Here is one summary paragraph:

Assuming enactment in mid-February, CBO estimates that the bill would increase outlays by $93 billion during the remaining several months of fiscal year 2009, by $225 billion in fiscal year 2010 (which begins on October 1), by $159 billion in 2011, and by a total of $604 billion over the 2009-2019 period. That spending includes outlays from discretionary appropriations in Division A of the bill and direct spending resulting from Division B.

Here is the CBO Director's blog, which offers and links to more information.  What do you all think?

I thank Bruce Bartlett for the pointer.


Is this a new stimulus study, or the one everybody on the left insists is not a stimulus study?

Is there any theory on when stimulus is most effective? Is it more effective during the early part or the later part? If we fit a polynomial to GDP, is it better to have a stimulus if the second derivative is negative or positive? I might be able to test for this, but I'm not sure about the theory... Any suggestions would be helpful.

Or perhaps any stimulus requires such a lag that it is always done late....

I hope the CBO is right. In that case, we might not break the bank on borrowing this year. And there would be some slight chance that if the economy recovers, they can cancel some of the pork (ha!)

Of course, if the economy doesn't recover, they will have this delayed spending to use as an excuse for why it hasn't worked. That might prevent additional spending.

Looking for a more expert opinion on this...

There is clearly a lack of timeliness to the stimulus bill. It would seem that a good argument for stretching out the time-table of outlays could be framed around Friedman's Permanent Income Hypothesis.
For instance, the income tax rebate checks didn't provide any lasting gains, because everybody knew that that income was quite temporary. Is it possible that the elongated spending timetable will encourage more aggregate demand? i.e. if I own a construction company that isn't positioned to take advantage of immediate spending, I might consider hiring people and buying equipment now because I know that the government contracts will still be available next year and the year after.

So, this is likely bot to be timely, temporary, nor targeted. I doubt transparency too.

I believe the short cut is simply to listen with brain and heart to Elvis Costello's "Shipbuilding" here

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