Paul Krugman has been writing about how he knew the stimulus package would be too small. But what size stimulus package did he actually recommend in November 2008?
I wrote this morning’s column partly because I had a hunch that the Obama people might be thinking too small on stimulus. Now I have more than a hunch – I’ve heard an unreliable rumor! So let’s talk about stimulus math, as I see it…. When I put all this together, I conclude that the stimulus package should be at least 4% of GDP, or $600 billion.
The stimulus package which Krugman is now saying he knew was too small was $787 billion. Needless to say, his response was completely predictable. Note also that he thought GDP was going to be $15 trillion in 2009… it was $14.2 trillion in the second quarter. That must be one hell of a jobless, but V-shaped recovery he’s anticipating, as it would require 11.3 percent economic growth over the third and fourth quarters.
Thanks to MM, who dug this one up from the NYT archives.