Jim O'Connor on expansiveness

[Barbara Laurence]

Very interesting figures. The high MPC of recent past must have to do with
stock prices. Especially the past two years. Saw a WSJ story that noted
that the consumer boom since early 1997 has been led by csr durables! Which
under normal conditions tail off at the end of an expansion.

It would be interesting to see what percent of increments to GDP over these
years is accounted for by investment and government spending -- taxes.

Maybe some of you know this story: James Tobin was approached by JFK in
1959, and was asked which end was up on the economic front. Tobin explained
that if you take all increments of GDP in the 1950s, a great majority went
to consumption, a lot went to G-T, for a total of c. 115 percent!
Investment was less than it was, in the aggregate, than at the start of the
decade, i.e., increments to investment were negative. Thus the
neo-keynesianism of JFK whose tax and other politics stressed raising
aggregate demand, but I much more than C.
Jim O'Connor