December 30, 2010

“Keynesian Government Spending Multipliers and Spillovers in the Euro Area”

Proponents of discretionary fiscal stimulus—most prominent among them Paul Krugman of Princeton University and The New York Times—emphasize the Keynesian multiplier effect that implies that additional government spending would induce an increase in private spending and therefore a greater than one-for-one effect on aggregate GDP. Yet, as shown in a recent ECB (European Central Bank) working paper by Tobias Cwik of Goethe University, Frankfurt, and Volker Wieland of the Centre for Economic Policy Research, London, this theory is, to say the least, not as good as its supporters claim. In fact, after investigating whether the spending package announced by Euro area governments for 2009 and 2010 is likely to have such a multiplicative effect on euro area GDP, Tobias Cwik and Volker Wieland came to a conclusion that … Read the full paper here (pdf).
Thanks: www.chicago-blog (in Italian).

1 comment:

  1. Keynesian economics is socialism lite, and has a 100% failure rate. Control freaks with limited life experience that usually can't compete in the private sector demonize what they have failed at, get into politics after passing some tests in law school,then regulate, tax and fee business to death. There is not one manufacturer in congress, but they pass regulations that kill them or drive them overseas and them blame them for dying or going overseas. Idiots. We had the worse case scenario of socialists controlling both houses of congress and a knucklehead elected president that has never had a job, never been a business owner, never been an executive, wasn't even successful in academics (he never was a professor), edited the Harvard Law Review and never wrote an article; an unaccomplished do nothing to sign off on what a few hundred of the same vacuous mental midgets that over pay themselves to tell us how to live our lives.