Why Fiscal Stimulus Programs Fail, Volume 2: Statistical Tests Comparing Monetary Policy to Growth Effects - Softcover

Heim, John J.

Softcover

ISBN 10: 3030647293 ISBN 13: 9783030647292

Publisher: Palgrave Macmillan, 2022

Synopsis

This book scientifically tests the assertion that accommodative monetary policy can eliminate the “crowd out” problem, allowing fiscal stimulus programs (such as tax cuts or increased government spending) to stimulate the economy as intended. It also tests to see if natural growth in th economy can cure the crowd out problem as well or better. The book is intended to be the largest scale scientific test ever performed on this topic. It includes about 800 separate statistical tests on the U.S. economy testing different parts or all of the period 1960 – 2010. These tests focus on whether accommodative monetary policy, which increases the pool of loanable resources, can offset the crowd out problem as well as natural growth in the economy. The book, employing the best scientific methods available to economists for this type of problem, concludes accommodate monetary policy could have, but until the quantitative easing program, Federal Reserve efforts to accommodate fiscal stimulusprograms were not large enough to offset more than 23% to 44% of any one year’s crowd out problem. That provides the science part of the answer as to why accommodative monetary policy didn’t accommodate: too little of it was tried. The book also tests whether other increases in loanable funds, occurring because of natural growth in the economy or changes in the savings rate can also offset crowd out.  It concludes they can, and that these changes tend to be several times as effective as accommodative monetary policy.  This book’s companion volume Why Fiscal Stimulus Programs Fail explores the policy implications of these results.

About this title

About the Author

John J. Heim is Visiting Professor at University of Albany-SUNY, and retired Clinical Professor of Economics at Rensselaer Polytechnic Institute, both in New York, USA.  He has served in cabinet and subcabinet positions in NY State and Local Government.  He is also an inventor of renewable energy devices and holds patents in this area.

From the Back Cover

“Keynesian macro policy has been thought to fail because of crowding out. To compensate … accommodating monetary policies were developed by the Federal Reserve … this book shows that Keynesian macro policy was not the failure, it was the accommodating monetary policies that failed; they were not large enough to overcome … crowding out.”

 - John Polimeni, Albany College of Pharmacy, Albany, NY, USA

This book comprehensively and scientifically tests the assertion that accommodative monetary policy can eliminate the “crowd out” problem, allowing fiscal stimulus programs (such as tax cuts or increased government spending) to stimulate the economy as intended. The book is intended to be the largest scale scientific test ever performed on this topic. It includes about 800 separate statistical tests on the U.S. economy testing different parts or all of the period 1960 – 2010. These tests focus on whether accommodative monetary policy, which increases the pool of loanable resources, can offset the crowd out problem. The book, employing the best scientific methods available to economists, concludes it could have, but until the quantitative easing program, Federal Reserve efforts to accommodate fiscal stimulus programs were not large enough to offset more than 23% to 44% of any one year’s crowd out problem. That provides the science part of the answer as to why accommodative monetary policy didn’t accommodate: too little of it was tried. The book also tests whether other changes in loanable funds, occurring because of natural changes in the economy or the savings rate can also offset crowd out, and concludes it can. Its companion volume Why Fiscal Stimulus Programs Fail, Volume 1: The Limits of Accommodative Monetary Policy in Practice explores the policy implications of these results.

John J. Heim is Visiting Professor at University of Albany-SUNY, and retired Clinical Professor of Economics at Rensselaer Polytechnic Institute, both in New York, USA.

Edition details

• Publisher: Palgrave Macmillan
• Publication date: 2022
• ISBN 10: 3030647293
• ISBN 13: 9783030647292
• Binding: Paperback
• Language: English
• Edition number: 1
• Number of pages: 645