The rapid rise on all components of spending as government purchases decline? That is an indication of multipliers less than one. The three components, except government, seem to be in more sustainable shape. So thank you to all the austerians, they have achieved greater growth with government cuts. And that must be the badly behaved function that Martin Feildstein was
talking about in 1979.
Brad seems to disagree, but this analysis seems as valid an anything Chris Romer has done in her research.
A sudden and unexpected negative government stimulus leads to expansion of the private sector. Also looks a lot like the Clinton policy, I might add.
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