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Wednesday, October 07, 2009

Busted!

Paul Krugman has been writing about how he knew the stimulus package would be too small. But what size stimulus package did he actually recommend in November 2008?
I wrote this morning’s column partly because I had a hunch that the Obama people might be thinking too small on stimulus. Now I have more than a hunch – I’ve heard an unreliable rumor! So let’s talk about stimulus math, as I see it.... When I put all this together, I conclude that the stimulus package should be at least 4% of GDP, or $600 billion.
The stimulus package which Krugman is now saying he knew was too small was $787 billion. Needless to say, his response was completely predictable. Note also that he thought GDP was going to be $15 trillion in 2009... it was $14.2 trillion in the second quarter. That must be one hell of a jobless, but V-shaped recovery he's anticipating, as it would require 11.3 percent economic growth over the third and fourth quarters.

Thanks to MM, who dug this one up from the NYT archives.

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