Unshocking News Of The Day

by Pejman Yousefzadeh on October 1, 2009

File under “Information that the Obama Administration Will Never Use To Make Policy, Despite Its Accuracy”:

The bottom line is this: The available empirical evidence does not support the idea that spending multipliers typically exceed one, and thus spending stimulus programs will likely raise GDP by less than the increase in government spending. Defense-spending multipliers exceeding one likely apply only at very high unemployment rates, and nondefense multipliers are probably smaller. However, there is empirical support for the proposition that tax rate reductions will increase real GDP.

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