1 / 22

Outlook for the Economy in 2009

Outlook for the Economy in 2009. Steven Kyle Cornell University December 2008. Christmas Spending Plans Year Average Spending Percent Change. American Research Group Survey Nov10-13; Tel. Interview with 1,100 Adults. The Gap in Demand. GDP = C + I + G + Net Exports

kevyn-boyer
Download Presentation

Outlook for the Economy in 2009

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Outlook for the Economy in 2009 Steven Kyle Cornell University December 2008

  2. Christmas Spending Plans Year Average Spending Percent Change American Research Group Survey Nov10-13; Tel. Interview with 1,100 Adults

  3. The Gap in Demand • GDP = C + I + G + Net Exports • C is down – People have rediscovered savings • I is down – Why invest if nobody is buying? • NX is down – The rest of the world is in recession also • That leaves only G able to expand

  4. What Kind of Stimulus? • DO • Make it soon • Contribute directly to immediate spending • Extend Unemployment • Aid to state government • Aid to already-in-the-pipeline projects • Try to promote long run growth where possible • DON’T • Make it piecemeal • Think that tax cuts will necessarily be spent • Imagine that incentives to lend = actual lending • Implement permanent programs unless they contribute to long run growth and productivity

  5. How Much? • Historical Context • WW2 is what got us out of the Great Depression – Deficits ranged as high as 20% of GDP – That was likely more than enough but still, it was huge • Chinese just announced stimulus of 20% of GDP • Goldman Sachs estimate of current gap at around 10% of GDP • Too much less dangerous than too little

  6. NAHB Housing Market Index – Builder Confidence Source: Builders' Economic Council (BEC) Monthly Surveys

More Related