take on the coast with weapons and baggageThere was until then the dismissal or resignationTherefore take care to two major pitfalls1 of the vote in 1999 with Charles PasquaEnhance in reference to the nature of the activitiesIn the first place the English and Russiansrate to 10 years is tended by 8 points to 3This new dictatorship is as old as GutenbergHere also the discussions ahead so complexAfter that we will make a development planThe debate over fiscal stimulus is surreal. It focuses on the means spent without taking into account the institutional differences, automatic measures and the level of household indebtedness. Stimulus of the euro area are thus widely underestimated. And it is incongruous to speak of effectiveness of additional public expenditures because only the amount would be important when the risk of deflation is high. Such focus on the number of spent billion would not disturbing if it had no consequences in terms of growth and purchasing power. Indeed, it returns "toxic" assets management at later and thus delays the moment when the recession is behind us. In addition, it avoids to question our model of growth based on debt replacing overindebtedness private by a public debt. If the implementation of stimulus is essential, it should be accompanied by proposals on the means of achieving growth not exclusively based on consumption and a debate on the effectiveness of public money involved.
The temporary increase in public expenditure is justified by the risk of deflation. It would limit the fall of effective demand, i.e. the household consumption and business investment. This public support temporarily takes over from the exhausted private sector and to reduce the gap between GDP growth and the growth potential, i.e. that which would be achievable if the factors of production were fully employed. Must define the amount of discretionary public support. It is wrong to compare stimulus without taking into account the effects expected "automatic stabilizers", i.e. the increase in unemployment benefits and social due to degradation of the labour market. Between 1991 and 1993, date of the previous recession in France, entitlement to unemployment benefits were increased automatically 0.6 of GDP. The monthly increases in the number of unemployed are very higher than those that we watched at the time. The increase in unemployment benefits that can be expected at least as strong as in the last recession should therefore be added to the amount of the"stimulus package". In the United States, discretionary measures include a substantial part of social benefits insofar as unemployment allowances are very small and limited in time. It is therefore essential that the US plan plans to help households that have more sources of income and those who fail more to repay their mortgage but who are in good faith. This could give the impression that the recovery plan is even more important in the United States in France, while the main difference is that assistance to households is automatic in France but discretionary in the United States. In total, by the hypothesis of a decline in GDP by 2 in 2009 and a stabilization in 2010, "the automatic recovery plan" will allow to limit the decline in household income and consumption in a third end of 2010, as calculated by Raphaël Espinoza in the journal "Economics and forecasting". End of 2010, growth will be higher by 0.5 point from what it would have been without automatic stabilizers. Thus, the French stimulus plan, including the "automatic" measures would reach about 4 of GDP. But it would have taken to implement the discretionary measures as of 2008, because it is in 2010 only that the automatic stabilisers will have the most effect on GDP.
Such efficiency assumed however that the household limit their savings. It is unlikely, given the current uncertainty, the decline in the value of heritage since the beginning of the crisis and the "Ricardian" behaviours to save tax cuts and increases in social benefits for the future tax increase that is sure to occur once the crisis passed. According to our calculations, when the deficit as a percentage of GDP increased by 1, the growth of household consumption is lower by 0.7 points. Historical records confirm this trend. Between 1991 and 1993, French household savings rate had increased by 2 points to 15.8 per cent of their disposable income. Nevertheless, the rise of the French household savings should be less than that will be observed in the United States where their heritage consisting in large part by life insurance fell less. On the other hand, their level of savings is high. Therefore, it is essential that the U.S. recovery plan is more important to limit the devastating impact of the debt private short-term economic activity. If Americans wanted to regain their balance sheets to before the crisis and that the asset prices continue at their current level, should be that the household savings rate increases of 7 percent on average over 10 years points. It has already increased by 3 points from the first quarter 2008 to reach 5 of disposable income.
It seems therefore irrelevant to compare only stimulus plans and focus on the race for billions. Such an analysis away from us when we leave permanently the crisis. Recession output request indeed rather a cantonment of "toxic assets" and effectively use public debt through non-sectoral and horizontal policies. Actions of central banks and Governments unprecedented for the time being seem to meet the most urgent by reproducing the errors of the past: believe that the debt will allow us to sustainably increase our buying power. And the United States lead US in this way without outcome underestimating our stimulus plans.
