The abstract of an interesting paper that I’m reading:
This note shows that the aggregate fiscal expenditure stimulus in the United States, properly adjusted for the declining fiscal expenditure of the fifty states, was close to zero in 2009. While the Federal government stimulus prevented a net decline in aggregate fiscal expenditure, it did not stimulate the aggregate expenditure above its predicted mean. We discuss the implications of limitations on states’ ability to run deficits for the design of fiscal stimulus at the federal level. We devote particular attention to intertemporal moral hazard concerns in a federal fiscal system, and ways to address these concerns.
Over at VoxEU, the authors explain the model, and implications.
Also, Paul Krugman has a “toy” climate model, that is pretty much a reverse investment discounting model, with climate change being the risk. It’s not too bad, as far as simple models go — and kind of helped me out.
A question that I have, and that I have never had answered is; what if climate change is a net positive for the human race? This is, of course, very counter-intuitive, and just meant as a thought experiment. However, what if “the world” opened its borders to immigrants (and subsidized them) from the places in the world that will supposedly be “devastated” (like the third world). We would be moving these people from a low-productivity, poor. subsistence equilibrium to a wealth-maximizing equilibrium on the scale of magnitudes…which would make these people much more well-off. Ostensibly, climate change would be the issue to push to coordinate global activity on this level…but it is welfare-maximizing. Does that change the cost and discount functions at all?
Just a FYI: My official position on “climate change” is that attempts to mitigate the problem are likely “too-little-too-late”, and that climate policy should be sold based on the premise of utility-maximizing.