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How Tax Distortion in the Global Economy Weakened the Obama Stimulus

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  • Howard Wachtel

Abstract

Why was the Obama administation's estimate of the jobs impact of the 2009 fiscal stimulus so far off? The economists used an average of Keynesian multipliers. But savings rose rapidly during the Great Recession, and the economists also underestimated leaks due to imports, partly the result of foreign investment by American companies, argues Howard Wachtel. Thus the multiplier was lower, but there are policies that can remedy that. He proposes policies to reduce the leakages.

Suggested Citation

  • Howard Wachtel, 2011. "How Tax Distortion in the Global Economy Weakened the Obama Stimulus," Challenge, Taylor & Francis Journals, vol. 54(6), pages 14-25.
  • Handle: RePEc:mes:challe:v:54:y:2011:i:6:p:14-25
    DOI: 10.2753/0577-5132540602
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