Tuesday, March 03, 2009

CBO on the Stimulus

The Congressional Budget estimates the impact of the recently passed stimulus call. Scroll down to page 12 for their bottom line.

Consistent with textbook Keynesian models, they report a a significant short-run effect but little long-run effect. In fact, they estimate the long-run effect on GDP may be slightly negative due to crowding out.

As for employment, the CBO estimates the bill will create 1.2 to 3.3 million jobs at the end of 2010. By the end of the President's first term, the projected impact of the bill falls to 0.3 to 0.7 million jobs.