Friday, July 1, 2011

A stroll down memory lane

In January of 2009, Christine Romer and Jared Bernstein predicted the effect of the coming stimulus on unemployment (full text available here). Inspired by others, we look at how well grounded these predictions turned out to be. Below is the monthly series of actual unemployment (the red dots) superimposed over the Romer and Bernstein predictions. They provided predictions of both what the world would look like with the stimulus (the dark blue line) and what it would look like without a stimulus (the light blue line). More than woefully incorrect, these predictions suggest that world we live in post-stimulus is worse than the apocalyptic outcome of the government doing nothing, as imagined by these supporters of the failed stimulus.
(click here to enlarge)

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