Public spending cuts have bigger multiplier than fiscal stimulus – paper
Research weakens case for expansionary policies, say authors
The multiplier effect on the economy of public spending cuts is bigger than that caused by fiscal stimulus programmes, says a research paper published by the Federal Reserve Bank of Richmond.
Understanding the Size of the Government Spending Multiplier: It’s in the Sign attempts to shed light on a critical aspect of economic policymaking in the wake of the global financial crisis.
The authors point out the lack of an accurate consensus about the impact of these fiscal tools: “The range of
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