Monday, May 18, 2009

A Theortical Critique of Government Stimulus Programs

Mario Rizzo has broken new ground in analyzing the problems with government stimulus programs.

His critique includes the insights that there is true value in idleness during a period of economic correction, that stimulus programs result in the necessity of economic agents to try to determine how the political system allocates stimulus resources in the concrete and for what length of time, and in which directions will those who receive income, subsequent to the government-round of spending, choose to spend.

His conclusion: Stimulus, as it is actually practiced, compounds the coordination difficulties that agents face.

His full analysis is here.


  1. Mario Rizzo's discussion of the 'value of idleness' after an economic catastrophe reminds me of the mnemonic recommended to all individuals misfortune throws unexpectedly into a wilderness survival situation.


    Stop Think Observe Plan

  2. Great pointer to a superb article. Thanks. Peter.