Tuesday, November 30, 2010

The Counterfactual

"It could have been worse" isn't a winning political argument (and probably wouldn't have been even if the White House managed to consistently make it), but its probably true.  Compared to a counter-factual of no stimulus, real GDP is between 1.4% and 4.1% higher because of the recovery act (ARRA), according to the Congressional Budget Office.  This has been nicely illustrated by the Center for Budget and Policy Priorities:
Also, the stimulus has lowered the unemployment rate by 0.8 to 2 percentage points - i.e., without it we'd be looking at 10.4% - 11.6%, instead of 9.6%.

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