tag:blogger.com,1999:blog-6616959642391988608.post5291269720401132032..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Thinking about GDP growthScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-6616959642391988608.post-43260804018751994432009-06-15T17:21:30.718-07:002009-06-15T17:21:30.718-07:00Simply Mark, there is a lag between cause and effe...Simply Mark, there is a lag between cause and effect. High tax rates lead to less productivity and eventually less tax revenue. Lower taxes lead to more income and hence more taxes. It is not a difficult thing to understand. The Bush tax cuts took about a year and half to start taking effect. Subsequently the U.S. had a number of months that had record Federal tax receipts and a budget Bobhttps://www.blogger.com/profile/18190525712352815677noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-8605391085419640262009-06-15T11:09:39.828-07:002009-06-15T11:09:39.828-07:00Mark: I'm assuming a modest decline in real GD...Mark: I'm assuming a modest decline in real GDP in the second quarter. As for proactive policies driving a rebound, I've mentioned before how I think the recovery from this recession has been delayed by Obama's wonton fiscal stimulus and the prospects therefore for much higher tax burdens. I think the recovery could have started months earlier if not for this.<br /><br />As for Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-89205106777371543602009-06-15T10:54:33.686-07:002009-06-15T10:54:33.686-07:00seeking: Try drawing the trend line so that real G...seeking: Try drawing the trend line so that real GDP never exceeds it. That's how Friedman specified his Plucking Model. I think you will find that the recent trend is less than 3%, as suggested in my chart.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-29079107925629899432009-06-12T20:12:37.533-07:002009-06-12T20:12:37.533-07:00Scott,
I think this will be my last (or next to la...Scott,<br />I think this will be my last (or next to last) comment. <br /><br />I've studied the history of potential GDP growth extensively. The one thing that I think is universal about eras of fast growth versus slow growth is whether unempoyment was relatively low or high. It seems that when it is low that potential GDP growth (particularily GDP per hour worked) is high. In the opposite Mark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-49804636996871298812009-06-12T19:41:50.809-07:002009-06-12T19:41:50.809-07:00Scott,
I commend you for bringing up Friedman'...Scott,<br />I commend you for bringing up Friedman's 1964 paper. It is seminal in some ways. I also recommend his subsequent paper (only seven pages) in 1993 in Economics Inquiry. Good reading.<br /><br />There have been many empirical paper done on the "plucking model."<br />The support for this model's description of macroeconomic behavior is very strong (but almost all of Mark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-18029001696059723612009-06-12T19:24:06.160-07:002009-06-12T19:24:06.160-07:00Scott,
This post made me organize alot of thoughts...Scott,<br />This post made me organize alot of thoughts for what it is worth. I actually spend much of my time thinkng about factors affecting long term growth as well as deviations from that path.<br /><br />Let me start by asking a few questions about your calculations. Based on the numbers I backed out what I think are your calculations. Correct me if I am wrong. It seems to me that you are Mark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-29453751278793954162009-06-12T11:32:51.929-07:002009-06-12T11:32:51.929-07:00All the things you mention are reasons to expect t...All the things you mention are reasons to expect that trend growth going forward will be less than it has been in the past. All but the hard-wing lefty Obama supporters have come to that conclusion. I think the market is coming to believe it also (though not fully yet). I hate to be in the middle of the consensus.<br /><br />As for CA, the propositions went down to a big defeat and that was Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-80078324394542920022009-06-12T11:18:13.287-07:002009-06-12T11:18:13.287-07:00Scott-
Excellent. Thanks. And yet this theory is...Scott-<br />Excellent. Thanks. And yet this theory is, IMO, predicated on the durability of our legal system and the protection for contracts remaining constant. Weaken the rule of law and the string lengthens and sags. We still don't know what reverberations the administration's handling of Chrysler and GM bankruptcies will have on investors' confidence in legal protections. Donny Baseballhttps://www.blogger.com/profile/08040288585224426073noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-60357068682103361862009-06-12T11:12:33.698-07:002009-06-12T11:12:33.698-07:00My regression of Real GDP from 1930 to present sho...My regression of Real GDP from 1930 to present shows a slowly declining pace from 3.9% in 1930 to 3.15% today as the economy becomes larger. I lean with Wesbury that after a GDP decline you get an above avg period to bring the near trend in line with the long term.seekingtraceevidencehttps://www.blogger.com/profile/02479493983076211876noreply@blogger.com