This study sees to ignore the fact that "Cash for Clunkers" made the country poorer by destroying perfectly good cars, but it at least makes two other useful points. From Fox News:
In fact, the Car Allowance Rebate System (CARS) known as Cash for Clunkers, did little to help the environment and was “far more expensive per job created than alternative fiscal stimulus programs,” according to new research led by Ted Gayer and Emily Parker of Brookings. . . .
“The existing evidence also suggests that these sales were pulled forward from sales that would have occurred otherwise in the future,” Gayer and Parker said. “Ten months after the end of the program, the cumulative purchases from July 2009 to June 2010 were nearly the same, showing little lasting effect.”
Americans traded in 700,000 “clunkers” between July 1 and Aug. 24, 2009, according to Brookings. . . .
The environmental gains made through the program weren’t all that impressive either, according to the study. . . .
Total emissions reduction was not “substantial” because “only about half a percent of all vehicles in the United States were the new, more energy-efficient CARS vehicles.” . . .
On this last point, suppose that fuel economy increased by 25 percent for these new cars and that the program did have an impact on cumulative purchases, the impact would be about 0.1% on energy use. Now recognize that it cost energy to produce those new cars and to destroy the old ones and the benefit is some tiny fraction of 0.1%.
Labels: keynesianism, stimulus