Wonkbook: How much stimulus does the economy need?

September 08, 2011, Washington Post

How big of a plan does President Obama need to propose tonight? I don't mean that as a question of optics, or politics. I mean that as a question of economics. If we're going to pretend that tonight's plan has some chance of passing and affecting the economy, we may as well set some benchmarks for it. According to a number of economists I consulted, the normal way you would start to think about this question is to take the difference between potential GDP -- what the economy could be producing if we were at a normal rate of unemployment…

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