From the WSJ …
Earlier this year, Christina Romer, the former chairman of the Council of Economic Advisers, wrote that cash for clunkers was an example of “very nearly the best possible countercylical fiscal policy in an economy suffering from temporarily low aggregate demand.”
Economists Atif Mian of the University of California Berkeley and Amir Sufi of the University of Chicago have examined “cash for clunkers,” the $2.85 billion program that subsidized consumers to buy new cars and destroy older ones.
Their conclusion: The program “had no long run effect on auto purchases.”
It did juice sales during its two-month run last summer, by about 360,000 cars, but then it quickly hurt sales by about the same amount, in effect stealing purchases from the future.
The program was a wash in a mere seven months.
Messrs. Mian and Sufi caution that … if this is the result from the “best possible” stimulus program — per Ms. Romer — the impact of the others must have been awful.
Excerpted from WSJ: Stimulus for Clunkers, Sept. 20, 2010
http://online.wsj.com/article/SB10001424052748703904304575497903033602826.html?mod=WSJ_Opinion_AboveLEFTTop
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