Wednesday, October 07, 2009

Perhaps a natural experiment 

After reading about John Key in National Review I have an idea. The size of the stimulus packages passed in Australia and New Zealand (as shares of GDP) are about even (Australia at 4.5% is a little larger.) But Australia's is even more inclined towards government spending than the US package, while New Zealand has adopted a very Reaganite program of tax cuts. If the Obama Administration's program is correct in not providing more immediate relief through lower taxes, we should see the recovery more vigorously in Oz. If the conservative/libertarian position is more correct, the Kiwis should do better. Here's the GDP and labor data from OECD. New Zealand has declined more sharply than Australia thus far, but it's early in the game I would say. Readers are invited to create a scorecard.