G is the thing Kugman talks about in this post. His basic argument about G is that the bigger the G the bigger a deficit it can run during a restructuring. He claims the depression was big because G was small and could not absorb deficits. This is Money Illusion, not in the sense that Sumner used the term. If G is bigger today than yesterday is simply means that we have incorporated more functions in G than yesterday.
In other words, the bigger the monopoly, the bigger the stimulus effect. However the bigger the G the longer the time to adapt, I am not sure what we have gained by having a bigger G.
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