I don't assume that correlation is causation which is why I wrote in my
original post:
I am not saying that my analysis proves anything but it sure looks like
the big increases in defense spending were strongly correlated with the
sharp decline in the unemployment rate. It also appears that defense
spending was on the way up well before Pearl Harbor which may be a
surprise to some economists like Barro and Mulligan but would not be a
surprise to historians.
David B. Shemano wrote:
Rudy Fichtenbaum writes:
During the depression the unemployment rate peeked around 25% in 1933.
It went down to 15% in 1937. From 1933 to 1936 real federal spending
increased increased 100%. (I am looking at index numbers for the
quantity of real GDP). Presumable the increase was associated with the
New Deal spending and it seems to have worked.
Why do you presume the correlation equals causation?
David Shemano
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Rudy Fichtenbaum
Professor of Economics & Chief Negotiator AAUP-WSU
Department of Economics
Wright State University
Dayton, OH 45435
Phone: 937-775-3085
Fax: 937-775-2441
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