Friday, August 07, 2009

Is the Stimulus Working?



This image is making the rounds of the web, originating in a report authored by Christina Romer.
The report says:
The fact that the observations lie along an upward-sloping line shows that, on average, things have improved more in countries that adopted bigger stimulus packages



Plausible, at first sight, until you look at the three outliers at the top right. Remove those three, and the remaining 19 would result in a flat line. And which are the three? China, Japan and Korea.

So, the fair conclusion would be - the current round of economic stimulus works, if you are in East Asia.

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