July 30, 2010
Battle of the Academic Models
By Cindy Ivanac-Lillig
Just in time for the beginning of the fall semester, there is a trickle of academic data and analysis on the unprecedented fiscal and financial market interventions over the past two years. There are a number of blogs buzzing today with Mark Zandi's report on the effect of these unprecedented interventions. He, along with Alan Blinder, try to show what economist affectionately refer to as the "counter factual” -- what would have happened if the steps from the government, the Treasury and the Fed were not taken.
In short, their model shows that the financial market intervention by the government and the Fed was very beneficial. Without the intervention, they conclude that there would have been approximately 5 million additional people out of work in 2010 (a 12.7% unemployment rate). However, they are not without their critics. John Taylor has a blog entry discounting this research.
The recession may have ended, but the academics are just getting warmed up. What do you think?
A few other resources on this latest buzz:
NY Times, In Study, 2 Economists Say Intervention Helped Avert a 2nd Depression
Federal Reserve Bank of St. Louis Review: Getting Back on Track
Mark Zandi talks about report on CNBC's Squawk Box (fast forward to 3:00):
Posted by Cindy at July 30, 2010 8:52 PM
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