Thursday, May 18, 2017

Well, Paul, the one is stimulus the other a bailout

Take fiscal policy: before the crisis there was strikingly little solid evidence about its effects, largely because history gave us so few natural experiments (causation generally ran from business cycles to budgets rather than the other way around).
Right. The government responds the business downturns with bailouts, and the business cycles ends when it is time for bailout.  It is all driven by the government's unsustainable insurance programs, and that is a multiplier less than one. 

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