Kevin Hassett, Bloomberg

Creating Jobs on Paper

Last week the Congressional Budget Office reported that the stimulus enacted a year ago created 1.4 million to 3 million full-time-equivalent jobs in the fourth quarter. The CBO drew heavily on commercial forecasting models and the macroeconomic model used by the Federal Reserve. Both of these old-school Keynesian models, by the CBO’s own admission, “tend to predict greater economic effects” from legislation like last year’s stimulus.

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