Friday, June 4, 2010

Cash for Clunkers FAIL

Because of the complexities of large economies, it's difficult to determine the effects of stimulus efforts by the government on those economies. Cash for Clunkers, however, was short enough in duration and concentrated on one particular area of the economy so that its effect could more accurately be gaged.

Below is the US Census data for auto dealer sales.

(please click to enlarge)

The dotted line represents the averages for the sales during the month of CfC and the month after.

As we predicted, all CfC did was spike the demand to the left with no overall net effect on auto sales as the areas under the two spikes above and below the dotted line (during and immediately after CfC) reveal.

$3 billion for absolutely nothing. Yet another refutation of demand-side Keynesian gimmickry upon which our recovery efforts have been modeled.

H/T: Coyote Blog


SarahB said...

But it made all those lawmakers FEEL so good. And made a good bit for SNL, so kind of balances out, don't you think?

No weekend chill?

B-Daddy said...

I'm with Sarah, it's the weekend, where's the music?

K T Cat said...

On the other hand, it removed a lot of budget cars from circulation, which hurt the poor.