This is instructive. It looks like Obama’s multiplier is zero, or possibly less than zero.

http://michaelscomments.wordpress.com/2009/10/02/september-unemployment-the-job-loss-accelerates/

You’re right — I was just being a dickhead

Still, there is no need for a business to do any hedging themselves. That’s what investment banks are for.

In a more perfect world we would have liquid futures on all assets, fairly priced inflation, liquid and fairly priced options at every strike, private currencies to satisfy every possible liquidity preference, and everybody would get their own pony.

that’s true, but I really don’t expect say the small manufacture to know how to inflation hedge himself and hedging is finite in a sense.

You can hedge the currency… but how do you exactly hedge domestically produced goods against cheaper imports.

You can take an economic hedge of course, but you also need to be pretty skilled in treasury matters and have lots of cashflow in case the hedge goes wrong. And what happens beyond the hedge period?

But seriously any large business is free to finance in whatever currency they like. And if they’re worried about domestic inflation there’s a market for that too.

The aussie at 92 cents today (and the TWI) is partially a consequence of all the distortions happening through our capital structure and the net effect will be even further marginal, but efficiently run businesses transferring to offshore sourcing and later the unions hacks supporting ALP referring to the CEO’s of these firms as unconscionably greedy. And around goes the merri-go-round of ignorance.

Barro has pulled together the empirical evidence… but this is a strange debate from the start because we know using simply logic that fiscal policy generally can’t have much of an impact. We know that partial RE does exist, and we know that foreign-debt-financed stimulus must be crowded out. These aren’t issues of opinion, any more than gravity is an issue of opinion.

Are you sure you’re not believing what you like to? You’re taking the ex ante results as being more instructive than the ex post results. I think this is a mistake.

Factor in the costs and distortions of deficit financing, and the viability of such policies seem totally pointless, if not deleterious.

See Table 3.4:
http://www.imf.org/external/pubs/ft/spn/2009/spn0913.pdf

The OECD list excludes Saudi Arabia, South Africa and China. These all implemented larger stimulus measures than Australia.

BTW, not only do the IMF and OECD use different lists of countries, they also use different estimation methods.

Nonetheless, they both indicate that Australia had one of the largest stimulus packages, relative to its GDP.

If you run a regression of the IMF data (size of stimulus x GDP) the result yields a tiny r2, i.e. statistically insignicant. Thus, on those figures, size of stimulus is irrelevant to projected economic growth. I should quickly add, however, that its probably too early to draw strong conclusions, yet I think it reasonable to be sceptical of claims that fiscal stimuli ‘work.’