Tag: "consumption"

The Permanent Income Hypothesis Versus Temporary Stimulus Measures

A highlight of my life was visiting with Milton and Rose Friedman in their San Francisco apartment and being served homemade cookies by Rose near Milton’s Nobel Prize hanging on a nearby wall. A few years later I asked Rose to confirm that she really made the cookies herself. She said if she served them, […]

Third Quarter Real GDP

(Not All Details are Bad) The front page of today’s Wall Street Journal features a useful breakdown of the third quarter real GDP statistics. On the negative side, it shows that the strength in consumption spending benefited from various temporary government programs: primarily cash for clunkers and the first time home buyers’ credit. Those will […]

Gross Domestic Product New II-Q Numbers

Some Reminders from Econ 101: GDP is an estimate of the total value of all final goods and services produced during a year (or in a quarter expressed at an annual rate). It's the broadest most comprehensive estimate of the value of the total output (and income) produced in the economy. Estimate. Yes, it's an […]

We’re All Keynesians, for Now

The word "Keynesian" is usually used pejoratively in the crowd I hang around with, intellectually speaking. It connotes to them, too much reliance on the government to stabilize the economy, leading perhaps to too much government over time, and less individual liberty that goes with that territory.

Let’s All Save More, But Not All at Once

The economy is facing quite a dilemma-or paradox. Actually, John Maynard Keynes called it the Paradox of Thrift, but most economists I know don't talk about it much for fear of being labeled a Keynesian. The paradox is this: most of us need to save more, i.e., consume less of our disposable income. Yet, if […]