Business 21C - Published by UTS Business

President Barack Obama has been heavily criticised for his handling of the Financial Crisis and the stimulus package. But economic modelling from Monash University’s Centre of Policy Studies shows that things could have been far worse. Professor Peter B Dixon explains.

On the anniversary of the US government’s Recovery Act, analysts and pundits have been debating the success or failure of the Obama program. A group of Australian researchers believe they have the answer.

Peter Dixon and his colleagues at Monash University’s Centre of Policy Studies have built a detailed model of the US economy. The model is used by several government agencies in Washington including the US International Trade Commission and the Departments of Commerce, Agriculture and Homeland Security.

In this video, Peter talks about recent modelling of the US recession. He explains that without a stimulus package, the recession would be worse than any economic downturn since the 1930s. Over the period 2009 to 2015 it would have cost the US about $8 trillion or approximately 60 per cent of a year’s GDP. This is the value of lost output associated with lost jobs.

Even with the Obama stimulus package the recession remains very serious, but the cost is cut back to about $4.5 trillion or about 35 per cent of a year’s GDP. Speaking on 17 February 2010, Obama said ‘One year later, it is largely thanks to the Recovery Act that a second Depression is no longer a possibility’.

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Video:

PETER DIXON | HOW EFFECTIVE WAS THE OBAMA STIMULUS PACKAGE?

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