Thursday, December 11, 2008

Tax cuts versus spending increases and GDP

Mankiw today is talking about the multipliers achieved through tax cuts versus those for spending increases. That is, how much does GDP go up for every dollar of tax cut or spending increase. He concludes we get more bang for the buck from tax cuts (contrary to Keynesian models) and so advises Obama to go ahead with his intended tax cuts.

[Update: I should note that last I heard, and this may have been before the election, Obama was planning to go forward with the tax cuts, but was considering delays of the tax increases on those making over $250k.]


Scooter said...

Can't wait to read.

Scooter said...

Guess I'm going to have to pay a little more attention to the good professor.