The critiques of is past times David too Christina Romer.
Bottom line:
The analysis
One mightiness receive got expected that a sympathetic analysis of the Sanders innovation would say, look, this is going to cost us a flake of growth, but the fairness too (claimed) amend handling of disadvantaged people are worth it.
Friedman's having none of that. In his analysis, the Sanders innovation volition too unleash a outburst of growth, claims for which would brand a fervent supply-sider similar Art Laffer blush.
"The Sanders program... volition heighten the gross domestic production past times 37% too per capita income past times 33% inward 2026; the growth charge per unit of measurement of per capita gross domestic product volition increment from 1.7% a yr to 4.5% a year." And, apparently, heighten the growth charge per unit of measurement permanently.
More stunning soundless are Friedman's claims almost employment, shown at left hither
Multipliers
So, where does this spurt of growth come upwardly from? The reply is the magic of multipliers.
But it's non only run of the factory financial stimulus multipliers. After all, Friedman too says that the Sanders programme would reduce the deficit, too past times 2025 plough the Federal Budget to surplus!
How are multipliers too then strong?
There seem to move 2 basic answers. First, Sanders assumes that at that topographic point is a large multiplier from income transfers.
If the authorities takes http from rich Peter, too gives that http to poor Paul, overall income rises 55 cents! The 1 quote that makes this clearest is
He cites many criterion sources for multipliers. He does non laissez passer a theory. The criterion story is that poor Paul consumes a lot to a greater extent than of his income, land rich Peter was investing it all inward company majuscule startups. Consumption is good, savings is bad, too then gross domestic product rises.
From this key assumption, the repose of the magic follows. Friedman creatively goes far beyond conventional deficit multipliers, to conjure multipliers out of revenue enhancement increases, raises inward the minimum wage, greater unionization, increased social programme spending, too and then forth. For example
Snark
At this point, I halt inward a flake of entertainment at all the criticism. After all, these are only criterion Keynesian arguments. The private multipliers inward Friedman's analysis are all conservative, too advert criterion middle-of-the-road sources. The economists right away too then critical of this analysis, including the Romers, quondam democratic direction CEA chairs who wrote the open alphabetic quality from past times CEA chairs, too Paul Krugman, receive got been making large multiplier arguments for years to fence for to a greater extent than spending. The "new Keynesian" academic literature includes multipliers far inward a higher house two, too then 1 tin betoken to "science" if yous wish. (Gauti Eggertsson, Christiano, Eichenbaum too Rebelo ; a simple example amongst multipliers equally large equally yous want.)
The Romers are right to emphasize that multipliers exclusively operate where "demand" is slack, too monetary policy doesn't steal the show. But the asterisks almost fixed involvement rates too output below "capacity" receive got been overlooked past times the mainstream many times before. It's a rare Keynesian economist who e'er thinks the economic scheme is operating at total capacity. And Friedman has the quondam monetary asterisk, too he addresses the latter past times claiming a large render to the labor forcefulness too increased productivity.
Even that persuasion is non too then out of the mainstream. For example, Brad DeLong too Larry Summers wrote an influential Brookings paper arguing for real large financial multipliers, amongst some of the same flavor. There is hysterisis; a multiplier volition select people dorsum to the labor marketplace seat (as Friedman claims), those people volition find skills, productivity volition increase; higher investment volition laissez passer us amend majuscule too too increment productivity. Demand creates its ain supply.
(Note: This postal service has pictures too quotes, which don't interpret good when the postal service is picked upwardly elswhere. If you're non seeing them, come dorsum to the original.)
Update: is past times David too Christina Romer.
Bottom line:
The analysis
One mightiness receive got expected that a sympathetic analysis of the Sanders innovation would say, look, this is going to cost us a flake of growth, but the fairness too (claimed) amend handling of disadvantaged people are worth it.
Friedman's having none of that. In his analysis, the Sanders innovation volition too unleash a outburst of growth, claims for which would brand a fervent supply-sider similar Art Laffer blush.
"The Sanders program... volition heighten the gross domestic production past times 37% too per capita income past times 33% inward 2026; the growth charge per unit of measurement of per capita gross domestic product volition increment from 1.7% a yr to 4.5% a year." And, apparently, heighten the growth charge per unit of measurement permanently.
More stunning soundless are Friedman's claims almost employment, shown at left hither
Multipliers
So, where does this spurt of growth come upwardly from? The reply is the magic of multipliers.
But it's non only run of the factory financial stimulus multipliers. After all, Friedman too says that the Sanders programme would reduce the deficit, too past times 2025 plough the Federal Budget to surplus!
How are multipliers too then strong?
There seem to move 2 basic answers. First, Sanders assumes that at that topographic point is a large multiplier from income transfers.
If the authorities takes http from rich Peter, too gives that http to poor Paul, overall income rises 55 cents! The 1 quote that makes this clearest is
He cites many criterion sources for multipliers. He does non laissez passer a theory. The criterion story is that poor Paul consumes a lot to a greater extent than of his income, land rich Peter was investing it all inward company majuscule startups. Consumption is good, savings is bad, too then gross domestic product rises.
From this key assumption, the repose of the magic follows. Friedman creatively goes far beyond conventional deficit multipliers, to conjure multipliers out of revenue enhancement increases, raises inward the minimum wage, greater unionization, increased social programme spending, too and then forth. For example
Snark
At this point, I halt inward a flake of entertainment at all the criticism. After all, these are only criterion Keynesian arguments. The private multipliers inward Friedman's analysis are all conservative, too advert criterion middle-of-the-road sources. The economists right away too then critical of this analysis, including the Romers, quondam democratic direction CEA chairs who wrote the open alphabetic quality from past times CEA chairs, too Paul Krugman, receive got been making large multiplier arguments for years to fence for to a greater extent than spending. The "new Keynesian" academic literature includes multipliers far inward a higher house two, too then 1 tin betoken to "science" if yous wish. (Joakim Book tries to reproduce the numbers too comes upwardly agency short.
Update 2: is past times David too Christina Romer.
Bottom line:
The analysis
One mightiness receive got expected that a sympathetic analysis of the Sanders innovation would say, look, this is going to cost us a flake of growth, but the fairness too (claimed) amend handling of disadvantaged people are worth it.
Friedman's having none of that. In his analysis, the Sanders innovation volition too unleash a outburst of growth, claims for which would brand a fervent supply-sider similar Art Laffer blush.
"The Sanders program... volition heighten the gross domestic production past times 37% too per capita income past times 33% inward 2026; the growth charge per unit of measurement of per capita gross domestic product volition increment from 1.7% a yr to 4.5% a year." And, apparently, heighten the growth charge per unit of measurement permanently.
More stunning soundless are Friedman's claims almost employment, shown at left hither
Multipliers
So, where does this spurt of growth come upwardly from? The reply is the magic of multipliers.
But it's non only run of the factory financial stimulus multipliers. After all, Friedman too says that the Sanders programme would reduce the deficit, too past times 2025 plough the Federal Budget to surplus!
How are multipliers too then strong?
There seem to move 2 basic answers. First, Sanders assumes that at that topographic point is a large multiplier from income transfers.
If the authorities takes http from rich Peter, too gives that http to poor Paul, overall income rises 55 cents! The 1 quote that makes this clearest is
He cites many criterion sources for multipliers. He does non laissez passer a theory. The criterion story is that poor Paul consumes a lot to a greater extent than of his income, land rich Peter was investing it all inward company majuscule startups. Consumption is good, savings is bad, too then gross domestic product rises.
From this key assumption, the repose of the magic follows. Friedman creatively goes far beyond conventional deficit multipliers, to conjure multipliers out of revenue enhancement increases, raises inward the minimum wage, greater unionization, increased social programme spending, too and then forth. For example
Snark
At this point, I halt inward a flake of entertainment at all the criticism. After all, these are only criterion Keynesian arguments. The private multipliers inward Friedman's analysis are all conservative, too advert criterion middle-of-the-road sources. The economists right away too then critical of this analysis, including the Romers, quondam democratic direction CEA chairs who wrote the open alphabetic quality from past times CEA chairs, too Paul Krugman, receive got been making large multiplier arguments for years to fence for to a greater extent than spending. The "new Keynesian" academic literature includes multipliers far inward a higher house two, too then 1 tin betoken to "science" if yous wish. (Justin Wolfers at the New York Times did some old-fashioned journalism: He called upwardly Friedman for a reaction. The article is great, too clear. Yes, Friedman did the calculation equally the Romers allege: An extra dollar of authorities spending today raises gross domestic product permanently; an extra dollar of permanent authorities spending raises gross domestic product growth permanently. That is at to the lowest degree non what the cited sources receive got inward mind.
Bottom line:
- The key thought inward Friedman's analysis is that taking http from Peter to laissez passer to Paul raises overall income past times 55 cents. From this, yous larn multipliers from raising taxes too spending, from higher minimum wages, to a greater extent than unions, too and then forth.
- I chuckle a petty flake that too then many economists who previously liked multipliers right away don't similar their logical conclusions.
- The Romers accuse a serious, uncomplicated arithmetics fault inward treating levels vs. growth rates. If they're right Friedman's whole analysis is only wrong on arithmetic.
The analysis
One mightiness receive got expected that a sympathetic analysis of the Sanders innovation would say, look, this is going to cost us a flake of growth, but the fairness too (claimed) amend handling of disadvantaged people are worth it.
Friedman's having none of that. In his analysis, the Sanders innovation volition too unleash a outburst of growth, claims for which would brand a fervent supply-sider similar Art Laffer blush.
"The Sanders program... volition heighten the gross domestic production past times 37% too per capita income past times 33% inward 2026; the growth charge per unit of measurement of per capita gross domestic product volition increment from 1.7% a yr to 4.5% a year." And, apparently, heighten the growth charge per unit of measurement permanently.
More stunning soundless are Friedman's claims almost employment, shown at left hither
too here. 
Multipliers
So, where does this spurt of growth come upwardly from? The reply is the magic of multipliers.
How are multipliers too then strong?
There seem to move 2 basic answers. First, Sanders assumes that at that topographic point is a large multiplier from income transfers.
If the authorities takes http from rich Peter, too gives that http to poor Paul, overall income rises 55 cents! The 1 quote that makes this clearest is
The stimulus from regulator[y] changes is inward Table 9. In general, the supposition is that reward receive got a multiplier of 0.9 compared amongst a multiplier of 0.35 for profits accruing to high-income persons. Influenza A virus subtype H5N1 wage increment coming out of profits, therefore, has a multiplier of 0.55.It's too visible hither explaining how a balanced budget soundless has a multiplier
the average value of the (governent spending) multiplier from 2017-26 is 0.89, falling from 1.25 to 0.87 equally the output gap closes
Other taxes are assumed to cut effective need amongst a multiplier of 0.35
[The] residual of revenue too spending programs volition increment work too economical growth because the spending programme has a larger financial multiplier than do progressive revenue enhancement increases.So revenue enhancement http too pass http raises gross domestic product past times 54 cents.
He cites many criterion sources for multipliers. He does non laissez passer a theory. The criterion story is that poor Paul consumes a lot to a greater extent than of his income, land rich Peter was investing it all inward company majuscule startups. Consumption is good, savings is bad, too then gross domestic product rises.
From this key assumption, the repose of the magic follows. Friedman creatively goes far beyond conventional deficit multipliers, to conjure multipliers out of revenue enhancement increases, raises inward the minimum wage, greater unionization, increased social programme spending, too and then forth. For example
I assume that the Paycheck Fairness Act volition heighten women’s reward past times 1% relative to men’s, too at that topographic point volition move an increment of 0.2% a yr for the adjacent decade. I assume that 50% of the increased cost goes to higher prices too 50% comes from profits, too these are assumed to lower spending past times higher income people amongst a multiplier of 0.35.This, I think, is the key case. Admire it for its courage, too creative operate of Keynesian arguments. These are the form of interventions that most economists acknowledge cut growth, but some fence for on other grounds. But inward Keynesian economics, taking coin from depression marginal propensity to eat people, too giving it to high marginal propensity to eat people raises GDP.
Snark
At this point, I halt inward a flake of entertainment at all the criticism. After all, these are only criterion Keynesian arguments. The private multipliers inward Friedman's analysis are all conservative, too advert criterion middle-of-the-road sources. The economists right away too then critical of this analysis, including the Romers, quondam democratic direction CEA chairs who wrote the open alphabetic quality from past times CEA chairs, too Paul Krugman, receive got been making large multiplier arguments for years to fence for to a greater extent than spending. The "new Keynesian" academic literature includes multipliers far inward a higher house two, too then 1 tin betoken to "science" if yous wish. (Gauti Eggertsson, Christiano, Eichenbaum too Rebelo ; a simple example amongst multipliers equally large equally yous want.)
The Romers are right to emphasize that multipliers exclusively operate where "demand" is slack, too monetary policy doesn't steal the show. But the asterisks almost fixed involvement rates too output below "capacity" receive got been overlooked past times the mainstream many times before. It's a rare Keynesian economist who e'er thinks the economic scheme is operating at total capacity. And Friedman has the quondam monetary asterisk, too he addresses the latter past times claiming a large render to the labor forcefulness too increased productivity.
Friedman is apparently only taking the consumption-first, poor-people-spend-more-than-rich-people, undergraduate ISLM analysis, amongst a flake of Delong-Summers hysterisis, to its logical conclusion. I manage inward a way: receive got those ideas to their logical decision too yous larn airheaded propositions (old try on that). Robbing Peter to pay Paul raises income; wasted authorities spending is good; theft improves the economy, transfers fifty-fifty from thrifty poor to spendthrift rich improve the economy, hurricanes are expert for us, social programs, unions, minimum reward heighten GDP, too and then forth. Well, if the logical conclusions are evidently silly, mayhap 1 shouldn't receive got been making pocket-size versions of those arguments all along. Economic Homeopathy is non wisdom.
Arithmetic
But the Romers uncover a deeper puzzle. Even amongst these assumptions -- authorities spending multipliers unopen to 0.8, too a transfer multiplier of unopen to 0.55 -- yous soundless don't larn the wild increment inward growth that Friedman claims. So how does he do it? Their answer:
We receive got a conjecture almost how Friedman may receive got incorrectly constitute such large effects. Suppose 1 is considering a permanent increment inward authorities spending of 1% of GDP, too suppose 1 assumes that authorities spending raises output one-for-one. Then 1 mightiness move tempted to mean value that the programme would heighten output growth each yr past times a per centum point, too and then heighten the grade of output later a decade past times almost 10%. In fact, however, inward this scenario at that topographic point is no additional stimulus later the outset year. As a result, each yr the spending would heighten the grade of output past times 1% relative to what it would receive got been otherwise, too and then the comport upon on the grade of output later a decade would move exclusively 1%.
If this is right, it's absolutely damning. This is a query of arithmetic, non economics. (And I would receive got to swallow some of my inward a higher house snark!)
Influenza A virus subtype H5N1 clearer (maybe) example: The authorities spends an extra $1 for 1 year. With a 1.0 multiplier gross domestic product goes upwardly $1 that year, period. If the authorities stops spending adjacent year, gross domestic product goes dorsum to where it was. That's the conventional Definition of multiplier, too the 1 that all Fridman's cited sources receive got inward mind. Per Romers, Friedman misread that calculation too assumed the outset $1 of spending raises gross domestic product past times $1 forever. In 10 years, yous receive got a multiplier of 10!
The Romers are cautious, too don't direct brand this charge. It's non my project to larn into the Hilary vs. Bernie whose-numbers-add-up fight. (At to the lowest degree someone hither genuinely seems to attention almost numbers too economical plans!) But whether the spreadsheets brand this arithmetics fault or non is an answerable question. I promise to inspire someone amongst a spreadsheet too a olfactory organ for such things to check. This is a swell fourth dimension for a replication exercise!
Update: is past times David too Christina Romer.
Bottom line:
- The key thought inward Friedman's analysis is that taking http from Peter to laissez passer to Paul raises overall income past times 55 cents. From this, yous larn multipliers from raising taxes too spending, from higher minimum wages, to a greater extent than unions, too and then forth.
- I chuckle a petty flake that too then many economists who previously liked multipliers right away don't similar their logical conclusions.
- The Romers accuse a serious, uncomplicated arithmetics fault inward treating levels vs. growth rates. If they're right Friedman's whole analysis is only wrong on arithmetic.
The analysis
One mightiness receive got expected that a sympathetic analysis of the Sanders innovation would say, look, this is going to cost us a flake of growth, but the fairness too (claimed) amend handling of disadvantaged people are worth it.
Friedman's having none of that. In his analysis, the Sanders innovation volition too unleash a outburst of growth, claims for which would brand a fervent supply-sider similar Art Laffer blush.
"The Sanders program... volition heighten the gross domestic production past times 37% too per capita income past times 33% inward 2026; the growth charge per unit of measurement of per capita gross domestic product volition increment from 1.7% a yr to 4.5% a year." And, apparently, heighten the growth charge per unit of measurement permanently.
More stunning soundless are Friedman's claims almost employment, shown at left hither
too here.
Multipliers
So, where does this spurt of growth come upwardly from? The reply is the magic of multipliers.
How are multipliers too then strong?
There seem to move 2 basic answers. First, Sanders assumes that at that topographic point is a large multiplier from income transfers.
If the authorities takes http from rich Peter, too gives that http to poor Paul, overall income rises 55 cents! The 1 quote that makes this clearest is
The stimulus from regulator[y] changes is inward Table 9. In general, the supposition is that reward receive got a multiplier of 0.9 compared amongst a multiplier of 0.35 for profits accruing to high-income persons. Influenza A virus subtype H5N1 wage increment coming out of profits, therefore, has a multiplier of 0.55.It's too visible hither explaining how a balanced budget soundless has a multiplier
the average value of the (governent spending) multiplier from 2017-26 is 0.89, falling from 1.25 to 0.87 equally the output gap closes
Other taxes are assumed to cut effective need amongst a multiplier of 0.35
[The] residual of revenue too spending programs volition increment work too economical growth because the spending programme has a larger financial multiplier than do progressive revenue enhancement increases.So revenue enhancement http too pass http raises gross domestic product past times 54 cents.
He cites many criterion sources for multipliers. He does non laissez passer a theory. The criterion story is that poor Paul consumes a lot to a greater extent than of his income, land rich Peter was investing it all inward company majuscule startups. Consumption is good, savings is bad, too then gross domestic product rises.
From this key assumption, the repose of the magic follows. Friedman creatively goes far beyond conventional deficit multipliers, to conjure multipliers out of revenue enhancement increases, raises inward the minimum wage, greater unionization, increased social programme spending, too and then forth. For example
I assume that the Paycheck Fairness Act volition heighten women’s reward past times 1% relative to men’s, too at that topographic point volition move an increment of 0.2% a yr for the adjacent decade. I assume that 50% of the increased cost goes to higher prices too 50% comes from profits, too these are assumed to lower spending past times higher income people amongst a multiplier of 0.35.This, I think, is the key case. Admire it for its courage, too creative operate of Keynesian arguments. These are the form of interventions that most economists acknowledge cut growth, but some fence for on other grounds. But inward Keynesian economics, taking coin from depression marginal propensity to eat people, too giving it to high marginal propensity to eat people raises GDP.
Snark
At this point, I halt inward a flake of entertainment at all the criticism. After all, these are only criterion Keynesian arguments. The private multipliers inward Friedman's analysis are all conservative, too advert criterion middle-of-the-road sources. The economists right away too then critical of this analysis, including the Romers, quondam democratic direction CEA chairs who wrote the open alphabetic quality from past times CEA chairs, too Paul Krugman, receive got been making large multiplier arguments for years to fence for to a greater extent than spending. The "new Keynesian" academic literature includes multipliers far inward a higher house two, too then 1 tin betoken to "science" if yous wish. (Joakim Book tries to reproduce the numbers too comes upwardly agency short.
Update 2: is past times David too Christina Romer.
Bottom line:
- The key thought inward Friedman's analysis is that taking http from Peter to laissez passer to Paul raises overall income past times 55 cents. From this, yous larn multipliers from raising taxes too spending, from higher minimum wages, to a greater extent than unions, too and then forth.
- I chuckle a petty flake that too then many economists who previously liked multipliers right away don't similar their logical conclusions.
- The Romers accuse a serious, uncomplicated arithmetics fault inward treating levels vs. growth rates. If they're right Friedman's whole analysis is only wrong on arithmetic.
The analysis
One mightiness receive got expected that a sympathetic analysis of the Sanders innovation would say, look, this is going to cost us a flake of growth, but the fairness too (claimed) amend handling of disadvantaged people are worth it.
Friedman's having none of that. In his analysis, the Sanders innovation volition too unleash a outburst of growth, claims for which would brand a fervent supply-sider similar Art Laffer blush.
"The Sanders program... volition heighten the gross domestic production past times 37% too per capita income past times 33% inward 2026; the growth charge per unit of measurement of per capita gross domestic product volition increment from 1.7% a yr to 4.5% a year." And, apparently, heighten the growth charge per unit of measurement permanently.
More stunning soundless are Friedman's claims almost employment, shown at left hither
too here.
Multipliers
So, where does this spurt of growth come upwardly from? The reply is the magic of multipliers.
How are multipliers too then strong?
There seem to move 2 basic answers. First, Sanders assumes that at that topographic point is a large multiplier from income transfers.
If the authorities takes http from rich Peter, too gives that http to poor Paul, overall income rises 55 cents! The 1 quote that makes this clearest is
The stimulus from regulator[y] changes is inward Table 9. In general, the supposition is that reward receive got a multiplier of 0.9 compared amongst a multiplier of 0.35 for profits accruing to high-income persons. Influenza A virus subtype H5N1 wage increment coming out of profits, therefore, has a multiplier of 0.55.It's too visible hither explaining how a balanced budget soundless has a multiplier
the average value of the (governent spending) multiplier from 2017-26 is 0.89, falling from 1.25 to 0.87 equally the output gap closes
Other taxes are assumed to cut effective need amongst a multiplier of 0.35
[The] residual of revenue too spending programs volition increment work too economical growth because the spending programme has a larger financial multiplier than do progressive revenue enhancement increases.So revenue enhancement http too pass http raises gross domestic product past times 54 cents.
He cites many criterion sources for multipliers. He does non laissez passer a theory. The criterion story is that poor Paul consumes a lot to a greater extent than of his income, land rich Peter was investing it all inward company majuscule startups. Consumption is good, savings is bad, too then gross domestic product rises.
From this key assumption, the repose of the magic follows. Friedman creatively goes far beyond conventional deficit multipliers, to conjure multipliers out of revenue enhancement increases, raises inward the minimum wage, greater unionization, increased social programme spending, too and then forth. For example
I assume that the Paycheck Fairness Act volition heighten women’s reward past times 1% relative to men’s, too at that topographic point volition move an increment of 0.2% a yr for the adjacent decade. I assume that 50% of the increased cost goes to higher prices too 50% comes from profits, too these are assumed to lower spending past times higher income people amongst a multiplier of 0.35.This, I think, is the key case. Admire it for its courage, too creative operate of Keynesian arguments. These are the form of interventions that most economists acknowledge cut growth, but some fence for on other grounds. But inward Keynesian economics, taking coin from depression marginal propensity to eat people, too giving it to high marginal propensity to eat people raises GDP.
Snark
At this point, I halt inward a flake of entertainment at all the criticism. After all, these are only criterion Keynesian arguments. The private multipliers inward Friedman's analysis are all conservative, too advert criterion middle-of-the-road sources. The economists right away too then critical of this analysis, including the Romers, quondam democratic direction CEA chairs who wrote the open alphabetic quality from past times CEA chairs, too Paul Krugman, receive got been making large multiplier arguments for years to fence for to a greater extent than spending. The "new Keynesian" academic literature includes multipliers far inward a higher house two, too then 1 tin betoken to "science" if yous wish. (Justin Wolfers at the New York Times did some old-fashioned journalism: He called upwardly Friedman for a reaction. The article is great, too clear. Yes, Friedman did the calculation equally the Romers allege: An extra dollar of authorities spending today raises gross domestic product permanently; an extra dollar of permanent authorities spending raises gross domestic product growth permanently. That is at to the lowest degree non what the cited sources receive got inward mind.
