Posts Tagged ‘multiplier’

by Brian Riedl, The Corner at National Review, Feb. 25, 2010

The Congressional Budget Office (CBO) has produced a new report estimating that the $862 billion stimulus has thus far saved or created 1.5 million jobs. Yet the CBO’s calculations are not based on actually observing the economy’s recent performance. Rather, they used an economic model that was programmed to assume that stimulus spending automatically creates jobs — thus guaranteeing their result.

Logicians call this the begging-the-question fallacy. Mathematicians call it assuming what you are trying to prove.

The CBO model started by automatically assuming that government spending increases GDP by pre-set multipliers, such as:

Read more at http://corner.nationalreview.com/post/?q=ZWVjZTI0Yzg5MTg2YjQ3NDEyYzQ3OTNmNWQ2N2EzN2Y=