TY  - JOUR
AU  - Mulligan,Casey B.
TI  - Means-Tested Subsidies and Economic Performance Since 2007
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17445
PY  - 2011
Y2  - September 2011
UR  - http://www.nber.org/papers/w17445
L1  - http://www.nber.org/papers/w17445.pdf
N1  - Author contact info:
Casey B. Mulligan
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL  60637
Tel: 773/702-9017
Fax: 773/702-8490
E-Mail: c-mulligan@uchicago.edu
AB  - The aggregate neoclassical growth model – with means-tested subsidies whose replacement rates began rising at the end of 2007 as its only impulse – produces time series for aggregate labor usage, consumption, investment, and real GDP that closely resemble actual U.S. time series.  Despite having no explicit financial market, the model has investment fall steeply during the recession not because of any distortions with the supply of capital, but merely because labor is falling and labor is complementary with capital in the production function.  Through the lens of the model, the fact that real consumption fell significantly below trend during 2008 suggests that labor usage per capita is expected to remain well below pre-recession levels for several years.
ER  -