tag:blogger.com,1999:blog-2546602206734889307.post4339286138355103216..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: Tyrie and the IMF on austerityMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2546602206734889307.post-29403231788498632472014-06-04T13:16:15.524+00:002014-06-04T13:16:15.524+00:00Re: infrastructure investment
In recession, const...Re: infrastructure investment<br /><br />In recession, construction companies are, usually, one of the first to suffer, specially in this Great Recession. Infrastructure investment has several big advantages:<br />They help industry that is certainly in need of help (that is, they certainly engage free resources)<br />They help industry that (often) employs lots of subcontractors<br />They are big<br />They concentrate on spending (tax cuts, for example, could result in saving, thus not helping recovery, while construction companies have to pay workers, materials,... so, industry is employed and money circulates)<br />Built objects will be used and will help other parts of economy (some sooner, some later, some more, some less, but eventually all will help some)<br />Typically, each state and local government has several half-finished projects in drawer waiting for funding, so they should be easily and quickly prepared<br /><br />Major drawback: instead of quickly finishing projects discussed for years, politicians move slowly, discussing what is or isn't necessary, and that's why those projects don't start in time to really help economy in time of crisis. But, just imagine if flooding protection was accelerated, instead of delayed because of crisis...<br /><br />In short, when economy is against zero lower bound, effect of government spending on GDP has multiplier of around 1.5 (best estimate). Infrastructure projects are a way to quickly inject lots of money somewhere where it would certainly be useful (although, maybe not optimal).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-53374218410102007902014-06-03T08:56:10.666+00:002014-06-03T08:56:10.666+00:00Is this article not full of Krugman's 'zom...Is this article not full of Krugman's 'zombies' and 'cockroaches' i.e. ideas and attitudes which have been disproved definitively years ago but which refuse to die or go away?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-74675558148179499182014-06-03T08:52:28.715+00:002014-06-03T08:52:28.715+00:00I agree with Simon, except that Tyrie has a point ...I agree with Simon, except that Tyrie has a point on infrastructure investment (II). II, as Tyrie rightly suggests, is a silly way of dealing with recessions because of the relatively long time between the decision to go ahead with II and the actual spending of money and employment of people on II: by which time the recession may be over, in which case all II does is to stoke the next boom. Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-21089824967192693382014-06-03T00:20:32.575+00:002014-06-03T00:20:32.575+00:00Why is it that very serious economists are obsesse...Why is it that very serious economists are obsessed with the timing of infrastructure investment? Is mistiming the investment in infrastructure of much consequence to the wider economy? Or are there just some pat little theories about infrastructure, which, even given their truth, economists can't help but cite even if their larger economic effects are completely minimal? Is this a sort of obsessive-compulsive disorder? crfhttps://www.blogger.com/profile/10726414637021391906noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-41135795821668202292014-06-02T14:08:09.674+00:002014-06-02T14:08:09.674+00:00There was that lovely scene in which Tyrie was say...There was that lovely scene in which Tyrie was saying off-message things about the economy a few years ago, but after he disappeared into a room with Hilton at the Tory Party conference, he came out utterly group-think. Anonymousnoreply@blogger.com