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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This week, noted economist Arthur Laffer wrote an interesting piece in the Wall Street Journal entitled The Real “Stimulus” Record.  In this piece, Dr. Laffer argues that before policymakers in Washington again try yet another round of stimulus spending in an ostensible attempt to mitigate high unemployment and poor growth rates, they should remember that President Obama’s first stimulus package did not exactly meet with great success.  As support for his argument, Dr. Laffer cites the facts that while stimulus spending over the past five years totaled more than $4 trillion, increasing  U.S. Federal government spending from 21.4% to 27.3% of GDP over the 2007 …
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This week, the House Committee on Government Oversight and Reform released a new Staff Report entitled Continuing Oversight of Regulatory Impediments to Job Creation:  Job Creators Still Buried by Red Tape. Among other significant data, the Staff Report found that: From 2010 to 2011, the number of final rules issued by federal agencies rose from 3,573 to 3,807—a 6.5 percent increase.  During that same time frame, the number of proposed rules increased 18.8 percent; The published regulatory burden for 2012 could exceed $105 billion, according to the American Action Forum, headed by a former director of the Congressional Budget Office; Analysis from the Heritage Foundation …
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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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Earlier today, the Subcommittee on Communications and Technology of the House Energy and Commerce Committee held an oversight hearing on entitled “The Budget and Spending of the Federal Communications Commission.”  Given the growing size of the federal bureaucracy, conducting this sort of oversight is indeed welcome news. In his opening statement, Committee Chairman Greg Walden noted that “Last year, the FCC was given a budget of $424.8 million, and the FCC has reported that it can maintain current services with a budget of $421.2 million.  Although that’s less than a one percent decrease, it’s a start, and I appreciate the work of the FCC to …
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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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