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Politics : Formerly About Advanced Micro Devices
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To: tejek who wrote (852758)4/28/2015 10:49:33 AM
From: TimF  Read Replies (1) of 1575610
 
I'm not calling for timing government cut backs during a recession. I'm saying the historical record is mixed and there are times when it worked well. Also that there is no historical or theoretical support for the idea that very small cutbacks will have large negative effects. The type of (reverse) multiplier that would be needed to get a disastrous contraction from such modest trims in government spending goes far beyond what Krugman or any other prominent big government keynesian economist would support. *

What isn't so mixed is the record of sizable tax increases during recessions. That almost always turns out to be negative.

But economic theory and history doesn't matter as much to you if it doesn't support your ideological support for big and growing government.

* - For example from Krugman -
"The thing is that both the fixed rate and closed multipliers are around 1.5"
krugman.blogs.nytimes.com
In reverse it would mean that your shrinking the economy by 1.5 times as much as government spending contracts. Lets double that and make it 3X. The spending cut was about 200million euros. That would result in an economic contraction of about 600 million euros, in an economy of about 2.6 or 2.7 trillion Euros at the time (now more like 2.8).

And that's from before the period where you said austerity was causing a problem, during the period were there was supposedly a huge problem from austerity in France, this was the spending pattern


tradingeconomics.com
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