Couldn’t someone, somewhere try to calculate how much the automatic stabilizers of European economies compensate for the difference between our stimulus packages and the US? I could settle for something problematic and rough and ready. Put a number on it.
A Fistful Of Euros
European Opinion
Good point and one I promised Yves Smith I would post on at my site. Germany is getting attacked when they have significantly more automatic stabilizers than the U.S. While I do believe the Germans have been slow on the uptake, it is not nearly as dire as many make it out to be.
‘The impact of the automatic stabilizers is increasing rapidly with the weakening
of economic conditions. For 2008, the estimated impact of automatic stabilizers—computed on the basis of changes in the output gap—is just -0.3 percent of GDP for the G-20. A larger impact, -1.2 percent of GDP, is projected in 2009, as the output gap widens. The impact in 2009 ranges from -2 percent of GDP for the U.K., France, and Korea, to -1.5 percent for the U.S., and to -½ percent for several emerging economies, including China, India, and South Africa (differences across countries reflect differences in the change in the output gap and the revenue and expenditure elasticity assumptions). As a gauge for sensitivity analysis, a uniform one percentage point of GDP worsening in the G-20 output gap broadly translates into a one-third percent of GDP increase in the fiscal deficit. An intuition behind this approximation is that government size—a good proxy for the magnitude of automatic stabilizers—is around one-third of GDP for the G-20 weighted average.’
This is from an IMF reported prepared only 10 days ago. Specifically, the end of page 10 to mid-11.
Here’s the link:
http://www.imf.org/external/np/pp/eng/2009/030609.pdf
According to the breakingviews.com story “Germany pays for past and future virtues” by Ian Campbell the IMF estimates the government stimulus in Germany to be about 3.5% of GDP (3.8% in the US) in 2009 and 2010. It points out that the German stimulus program already gets traction: new car sales are up by 21.5% in February.