Garett Jones on Stimulus

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🗓️ 19 September 2011

⏱️ 62 minutes

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Summary

Garett Jones of George Mason University talks with EconTalk host Russ Roberts about the workers who were hired with money from the 2009 American Recovery and Re-investment Act--the stimulus package. Jones (with co-author Daniel Rothschild) recently completed two studies based on surveys and interviews with firms who received stimulus funds and workers who work at those firms. They found that 42% of workers hired had been unemployed. The remainder came from other jobs or from outside the labor force such as retirement or school. Is 42% a big number or a small number? Jones argues it is small and defends his conclusion. The conversation also includes a discussion of the labor market generally and why the stimulus spending may not have been effective.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	other information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you.
0:36.8	Today is September 14th, 2011, and my guest is Garrett Jones of George Mason University. Garrett,
0:45.5	welcome back to Econ Talk. That's great to be back. Our topic for today is the Economics of
0:50.2	Stimulus. Garrett, the Mercatus Center here at George Mason recently published your study
0:55.3	with Daniel Rothschild. It's stimulus dollars higher than unemployed. We're going to talk about
1:00.2	that study, but I want to start with talking first about Keynesian stimulus more generally.
1:04.8	How is it supposed to work?
1:07.1	Well, the Keynesian story is that in the short run, economy sometimes get tied up in knots, where
1:13.4	there are a lot of workers, a lot of firms that just aren't going to be very useful, very
1:17.6	productive for a while. They're unemployed workers, unemployed firms. And the Keynesian story
1:22.8	is that while the market is figuring out what to do, while the market is healing itself,
1:27.2	while prices are adjusting and wages are adjusting or not.
1:30.6	Or not.
1:31.6	Skeptical sometimes they're some skeptical. But the traditional New Keynesian story, which
1:34.7	I thought of as the mainstream view for decades, was that in the short run, the government
1:40.7	might be able to go in and use those workers, while the market is figuring out what it's
1:45.4	going to do two or three years down the road. So in a sense, this is quite similar to
1:49.9	the old debate known as the Socialist Calculation Debate. So back in the early 20th century,
	...

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