New Stimulus ? No Stimulus?

Bruce Bartlett, a former treasury dept economist has an article in the FT titled "We do not need a second stimulus plan"

He explains that because really stimulative programs that were part of the stimulus would only stimulate much later, there is no basis for declaring the stimulus plan passed earlier in the year was insufficient and that we need a new one.

Indeed Krugman has held a different view for a long time. So I just checked his blog and there is an entry on the article titled "Bruce Bartlett misstates the problem"

he points out the statement:

"The problem is that the Obama administration was much too optimistic about how quickly stimulus spending would affect the economy. Christina Romer, chair of the Council of Economic Advisers, and Jared Bernstein, chief economist to vice president Joe Biden, forecast in January that the stimulus would reduce unemployment almost immediately."

and points that it is inaccurate.While this may be factually true, it seems to me it does little to invalidate the central argument Mr. Bartlett is actually making.

I wish there would be more Krugman substantiation of the statement: "The problem, instead, is that the hole the stimulus needs to fill is much bigger than predicted."

I would be very interested in finding data quantifying the scope of shovel ready projects with large multiplier effects.

As I have written elsewhere projects with network effects as described in my holistic theorem would have the biggest stimulative impact, possibly at the lowest cost.

These include
-network infrastructure projects such as roads and bridges, in particular near housing developments (These would help support prices of houses in those areas by making the developments more easily accessible to urban work areas)
- internet infrastructure development projects
-electrical/smart grid development projects
-Financial Services central clearing

The question to me is how many(number and budget) can be moved along, on what timeframe,



07/09/09 - Here's the WSJ survey of economists on the question: