blog of kaiyen

BBC NEWS | Business | Obama pledges 600,000 summer jobs.

One thing I know is that there is a lag when it comes to fiscal policy.  The government spends the money, but creation of jobs takes a bit of time as projects are identified, and certainly hiring into those jobs takes time, then income, then willingness to spend, then GDP rise.  

But I wonder how long the lag usually is.  This is something we never studied really in my macroeconomics classes.

I also wonder whether the fear of spending for the sake of spending (which is actually kind of okay when the goal is to SPEND above all else) made selection of “shovel-ready” projects a lot more difficult.  So even if a project was ready to go there was still more scrutiny, so it took longer to get going, so jobs are still falling.