In this chart I have plotted private sector GDP to Federal spending, dollar of private GDP per dollar of federal spending. Let us set 2009 Q2 as the base line, the ratio as it was after the crash but before the stimulus. If the multiplier was greater than one, we would expect our ratio to increase as the stimulus was spent. It does increase, a scant 1% in Q4, then immediately drops below baseline, dropping by 11%.
Note: Private sector spending here includes state government spending.
The result predicted by John Taylor and Company in 1993.
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