Re:Our Invisible Rich
by freehunter on Monday September 29, 2014 @03:18PM
(#8384660)
It really depends on when the money is spent and what the money is spent on.
>They start by looking at multipliers for government consumption... In developed countries, they find that the long-run multiplier is 0.66.
but then
>However, government investment—things like infrastructure building—results in higher multipliers. Here, the long-run multiplier was 1.5 for developed countries
So that shows that the "what" matters. Here's the "when":
>They examined several European countries and showed that fiscal multipliers are substantially higher than previously assumed. Previous IMF studies had assumed multipliers of roughly 0.5. In other words, a €1 injection of government money into the economy would only have a net benefit of 50 centimes. By contrast, Messrs Blanchard and Leigh found that the actual multipliers in the early years of the crisis were “substantially above 1”.
That being based on a 2013 study by the IMF, later than the 2011 study quoted on Wikipedia.
>They start by looking at multipliers for government consumption... In developed countries, they find that the long-run multiplier is 0.66.
but then
>However, government investment—things like infrastructure building—results in higher multipliers. Here, the long-run multiplier was 1.5 for developed countries
So that shows that the "what" matters. Here's the "when":
>They examined several European countries and showed that fiscal multipliers are substantially higher than previously assumed. Previous IMF studies had assumed multipliers of roughly 0.5. In other words, a €1 injection of government money into the economy would only have a net benefit of 50 centimes. By contrast, Messrs Blanchard and Leigh found that the actual multipliers in the early years of the crisis were “substantially above 1”.
That being based on a 2013 study by the IMF, later than the 2011 study quoted on Wikipedia.
http://www.economist.com/blogs/freeexchange/2013/08/fiscal-p...