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Understanding the Sustainability of Jobs from

Federal SpendingPresented by REMI

Frederick Treyz, CEORod Motamedi, Associate Economist

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Overview

• Introduction

• Example issues

• Simulation

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Patterns of Government Spending

• Providing public goods

• Borrowing to fund large investment projects– Canals, dams, interstates, university system,

internet

• Borrowing for short-term job creation

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Health Care

• Current issues– Rising costs, lower health results, expenditures

• Possible long-term benefits– Improved productivity, longer work life

• Example policy variables– Labor productivity, consumer price/spending,

participation rates, government spending (state and federal)

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Transportation

• Current issues– Deteriorating infrastructure, new livability

standards

• Possible long-term benefits– Better access, household savings, regional

attractiveness

• Example policy variables– Labor/commodity access, consumer spending,

employment, amenity

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Education

• Current issues– Falling graduation rates, subpar international

ranking

• Possible long-term benefits– Increased productivity and innovation

• Example policy variables– Productivity, employment/output, amenity

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Housing

• Current issues– Aging housing stock, blighted neighborhoods,

sprawl

• Possible long-term benefits– Consumer savings, efficiency in public services,

regional attractiveness

• Example policy variables– Consumer/government spending, amenity,

housing price

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Energy and Environment

• Current issues– New focus on renewable energy sources and

efficiency

• Possible long-term benefits– Lower energy costs, energy independence

• Example policy variables– Consumer spending, production/fuel costs,

demand, imports and self-supply

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Structural Model

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New Economic Geography Model Structure

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Weatherization

• DOE regional spending formula– Low income population, energy expenditures,

local climate

• DOE inputs: – $6,500/house investment– 32% energy savings/house

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Weatherization Assumptions

• Increased demand for construction

• 1/3 free ridership

• No benefit deterioration in first 10 years

• All benefits spent on other goods– Real income increases for recipients– Energy suppliers’ real income decreases

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Sample Results: Weatherization

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[Model Demonstration]

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