Fiscal policy has 'shot its wad'

Another triumph of Barack Obamanomics;

Critical to the effectiveness of Cash for Clunkers as stimulus is the question of when purchases would have been made in the absence of the programme. That is, from how far into the future were programme sales borrowed? After all, if purchases under the programme were going to be made in the very near future anyway, then the programme would do little to smooth durable goods sales; it would merely shift recessionary sales to recessionary sales.

And do nothing to moderate the recession.

Estimates at the time were optimistic about the programme’s ability to pull sales from the distant future. A September 2009 report by the Council of Economic Advisors predicted sales were pulled forward from the next five years; the National Highway Traffic Safety Administration projected a three-year pull-forward window.

But, now we know;

Ex post analysis has shown that sales were pulled forward from the months immediately following the programme. Estimates of the pull-forward window vary from six to ten months, but all suggest that sales were shifted from the very near future.

And, that's not all;

In our study, we show that the combination of this relationship and the fuel efficiency restrictions imposed on new vehicles purchased under the programme meant the programme actually reduced overall new vehicle spending.

About $3 billion worth of disstimulus. 

Well done!