2009-02-19 | Any economist can predict this... Can you? Big news. United States President Barack Obama has ordered the deployment of an additional 17,000 soldiers and marines to Afghanistan.
Surprised? Not at all.
During a recession, most economists will prescribe an increase in government spending. For instance, the government can hire some workers to dig holes and then fill them up. The increase in government spending will stimulate the economy by creating jobs, income, consumption, income, consumption, income, ..., and a multiplier effect on output. In this case of current recession in US, additional troops are sent to Afghanistan. By sending troops, employment will be created in the defense related industries. If they serve the same purpose, why sending troops intead of digging-filling holes? It turns out that in the United States, it is easier for the president to send troops than for the the president to convince Congress to pass a bill of digging-filling holes. Getting Congress to pass a bill can take months, if not years. Since in the long run, we are all dead, the president definitely will try to send troops instead of getting Congresss to pass a bill of similar effect.
Don't take my words. Try to check the timing of US deploying additional troops to foreign countries. How is the timing relate it to recessions? As a starter, try http://research.stlouisfed.org/fred2/ which provides ready-made plots of "Government Receipts, Expenditures and Investment" against NBER recession dates.
2008-12-21 | My students performed poorly in the final exam.
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