Although the National Bureau of Economic Research tells us that the recession ended in July 2009, the U.S. economy nonetheless remains in a period of sluggish and uncertain growth.  Consumer confidence remains low, and, with a pending “fiscal cliff,” the “Recession Probability Index” jumped from about 2 to nearly 20 in August.  Unemployment remains exceptionally high.  As we discussed in our paper Can Government Spending Get America Working Again? An Empirical Investigation, the government’s effort to jump start the economy with spending has failed (and will continue to do so), and recovery is likely to depend on the expansion of private sector investment.  Yet, private …
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What is the effect of regulation on investment?  At a high level of abstraction, it is impossible to say.  Rate-of-return regulation, for example, is criticized by economists for possibly encouraging too much investment—a principle known as the Averch-Johnson Effect.  On the other hand, if a firm fears that the regulator will alter the rules in a way that reduces the ability to earn profits on large, long-term capital investments, then the incentive to make such investments is reduced.  Importantly, the issue is not, as some claim, just about “regulatory uncertainty.”  There could be great uncertainty about future rule changes, but if the expectation is that …
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Last week, there was sad story in the Washington Times reporting that the District of Columbia has received more than $855 million in federal economic stimulus funds since 2009, but that this spending had not been shown to produce any significant improvement in the city’s jobs outlook.  As a third-generation Washingtonian, it would be easy for me to blame the failure of federal stimulus to actually do any stimulating on the congenital dysfunction of the D.C. Government.  Instead, I think the lesson learned here is that despite its intentions, government stimulus just isn’t that helpful in creating new private sector jobs regardless of geographic location. …
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What is the effect of the mobile Internet on the economy?  This question is an important one, and one that has drawn significant attention by researchers, policymakers, and even the President.  What makes answers to this question difficult to come by is that while the Internet may influence things like income, education, depression, and so forth, Internet use may in turn be influenced by income, education, depression, and so forth.  Establishing the causal direction of the relationship, and its magnitude, can be challenging. Due to the present economic woes, the effect of the Internet on job creation is an empirical question of substantial importance.   The …
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