Download THE OBAMA ECONOMIC RECOVERY PLAN: National

THE OBAMA ECONOMIC RECOVERY PLAN: NATIONAL AND
REGIONAL MACROECONOMIC EFFECT OF ENERGY AND
ENVIRONMENTAL POLICIES
Authors: Frederick Treyz, Ph.D
Mark D’Amato, Ph.D
Rod Motamedi
Overview
Key aspects of the Obama Economic Recovery Plan relate to environmental and energy policy. These include new
electricity transmission lines, energy-efficiency investments in public buildings, weatherization of millions of
homes, and creation of renewable technologies. By understanding how these policies affect jobs, income and other
measures of economic activity, we can predict how these policies will improve and create stability for the economy.
Policy makers are also concerned about the time dimension of macroeconomic impacts. The rate in which a new
technology or improvement can be adapted, and the economic speed of adjustment are critical in evaluating a
particular policy initiative. Furthermore, inter-industry relationships need to be examined to fully understand the
ripple effects on the regional economies across the United States.
The location of economic impacts is also important, for political as well as economic reasons. Energy resources, in
particular, are distributed unevenly across the United States, so energy policies have geographically disproportionate
impacts on users and producers. Even so, changes in one state or region have significant economic spillovers into
surrounding regions and the country as a whole.
Methods
This study shows the macroeconomic effects of energy programs in Obama’s American Recovery and Reinvestment
Plan. We evaluate the total economic effects of the policy changes using the REMI PI+ macroeconomic model,
consisting of major regions of the United States. .
Results
The results of the study show the short and long-run effects of transmission improvements, energy-efficiency
investments, and renewable policies. In addition, we show the effect in the short- , medium- and long-term, for
major regions of the U.S., across different industries, and the economy as a whole
Conclusions
This paper demonstrates that at the national level the short-term multiplier predicts immediate job and output
increases associated with energy investments might be different than the long-term multiplier over time. Finally on
a regional level, much of the economic impact depends on the energy resources, direct spending for the program,
and the economic spillovers into the surrounding regions and nation.
References:
“Measuring the Economic Impact of Improved Electricity Distribution in Connecticut,” Final Report for
Connecticut Light and Power; Frederick Treyz, Ph.D. and Adam Cooper, July 2007.
“The Economic Impact of Building All New Homes in New Mexico to Meet Energy Star Guidelines Starting in
2010,” Final Report for Environmental Protection Agency; Frederick Treyz, Ph.D. and Rod Motamedi, June 2007.
“Combined Economic Impact of Enacting a Feebates Program in Rhode Island, Connecticut, Massachusetts,
Maine,” Final Report for Environmental Protection Agency, Frederick Treyz, Ph.D., Billy Leung, and Jefferson
Clarke, December 2004
“Forecasting the Effects of Electrical Utility Deregulation: a Hypothetical Scenario for New Jersey,” Submitted to
Journal of Business Forecasting, Frederick Treyz and L. Petraglia, Summer 1997.