Tuesday, November 15th, 2011 9:00 am

Buy American

Federal mandates that government purchases should be “buy American” unless there are exceptional circumstances, such as in the American Recovery and Reinvestment Act of 2009, have a significant positive impact on U.S. manufacturing employment.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel
Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Agree 6
4 years ago I would have disagreed. Recent evidence (Autor Dorn Hanson) suggests yes.Caveat: costs from higher prices & other inefficiencies
-see background information here
Bio/Vote History
         
Alesina Alberto Alesina Harvard Disagree 6
Bio/Vote History
         
Altonji Joseph Altonji Yale Uncertain 6
The policies will boost demand for U.S. manufacturing, at least in short run. But other countries may retaliate.
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT Disagree 4
Hard to believe this does much at all. But I'm speaking based on my prior. I've not seen any rigorous analysis.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Disagree 5
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 5
Bio/Vote History
         
Chetty Raj Chetty Stanford Disagree 4
Bio/Vote History
         
Chevalier Judith Chevalier Yale Uncertain 5
This is an empirical statement, tough to evaluate thoroughly.
Bio/Vote History
         
Currie Janet Currie Princeton Disagree 6
If the "buy American" clause raises the price of public works, then fewer of them will be undertaken, which will undercut the mandate.
Bio/Vote History
         
Cutler David Cutler Harvard Agree 4
Bio/Vote History
         
Deaton Angus Deaton Princeton Disagree 4
Seems wildly unlikely that the magnitude would be significant, even without retaliatory or GE effects,
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 2
Seems to hard disagree with the statement as posed. But that does not at all mean that this is a good idea!
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 5
Bio/Vote History
         
Fair Ray Fair Yale No Opinion
Question is too vague.
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Disagree 7
Highly unlikely. Strict enforcement would lead to retaliation and trade wars, hurting US employment. Lax enforcement would have small effect
Bio/Vote History
         
Goldin Claudia Goldin Harvard Uncertain 4
The impact is quite uncertain, depends on elasticities (degree of substitutability, price differences, impact on input prices, etc.).
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Did Not Answer
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Disagree 6
These campaigns may be able to tilt employment so that there is more manufacuting employment, but I suspect that the impact is not great.
Bio/Vote History
         
Hall Robert Hall Stanford Did Not Answer
Bio/Vote History
         
Holmström Bengt Holmström MIT Did Not Answer
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Strongly Disagree 10
While it is possible to write a model in which the intended effect would occur, govt purchases are too small a share to make a model work.
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Disagree 7
It raises costs which increases taxation. No net gain to anyone in the long run.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Disagree 1
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Disagree 7
Less than 0.1% according to one plausible calculation -- even ignoring possible retaliation (not to mention being a WTO violation).
-see background information here
Bio/Vote History
         
Lazear Edward Lazear Stanford Did Not Answer
Bio/Vote History
         
Levin Jonathan Levin Stanford Agree 4
Not aware of much evidence on this, but government purchases are substantial, so expect at least some effects.
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 7
Such mandates are well-intentioned but quite inefficient
Bio/Vote History
         
Nordhaus William Nordhaus Yale Uncertain 1
Too confusing.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Disagree 8
I don't think such mandates ever have much impact. In theory they lead the dollar to appreciate, crowding out any positive effect.
Bio/Vote History
         
Rouse Cecilia Rouse Princeton Uncertain 4
Given vagueness in the definition of whether a product is "American" I suspect this provision may be more symbolic than not.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 4
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Did Not Answer
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Disagree 4
There will surely be some positive effect, but I would be surprised if it were non-trivial.
Bio/Vote History
         
Shin Hyun Song Shin Princeton Uncertain 7
Bio/Vote History
         
Stock James Stock Harvard Disagree 5
The exception in which "buy American" makes a difference is in military production for which the government is the main market.
Bio/Vote History
         
Stokey Nancy Stokey Chicago Disagree 3
Bio/Vote History
         
Thaler Richard Thaler Chicago No Opinion
Bio/Vote History
         
Udry Christopher Udry Yale Disagree 5
Likely increases employment in specific firms, but at relatively high cost. Effect on aggregate employment unclear to me.
Bio/Vote History
         
Zingales Luigi Zingales Chicago Strongly Disagree 5
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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