Thursday, July 9, 2015

What Happened When The U. S. Government Cut Spending 35%?-a postwar economic boom

See Krugman on Canada's Austerity by David Henderson of EconLog.
"In other words, he talked about one of my favorite examples of successful austerity, the case of Canada, which I studied here. It's not my absolute favorite. My absolute favorite is one I documented here, in which the U.S. government cut spending, not by a measly 6 percent of GDP, but by about 35 percent of GDP. The result, as President Truman pointed out at the time, contrary to the predictions of Keynesians Paul Samuelson and Gunnar Myrdal, was a postwar economic boom."

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