The problem stems from the Romers' study on the multipliers, which is hyper-Keynesian giving a multiple of 3 but does not differentiate between tax cuts and spending. Tax cuts are not found to be more stimulative than spending. This study concludes that all stimuli are more potent than thought before. Then, Mankiw dishonestly used a different study with different methodology that gave a spending multiplier of 1.4 to make a comparison. This has already been exposed in the economics world.
The problem stems from the Romers' study on the multipliers, which is hyper-Keynesian giving a multiple of 3 but does not differentiate between tax cuts and spending. Tax cuts are not found to be more stimulative than spending. This study concludes that all stimuli are more potent than thought before. Then, Mankiw dishonestly used a different study with different methodology that gave a spending multiplier of 1.4 to make a comparison. This has already been exposed in the economics world.
specultr 3 years ago
I always thought the republican economic policies are made not based on what works but what they want along with their lobbyist's interest.
Theory, study has no place in their decision.
allgoo19 3 years ago