The Keynesian differential and government cycles

Nick Rowe gets into the issue of the rate of change inn government spending and the change in growth.

Look, the economy cycles, the grey bars,  mostly on the presidential election cycle since 1981.  It was not always that way, but since 1981 it has been. Nor is it a 100% slam dunk, more like a 80% slam dunk.   Why? Government spending goes up right after the regime change, almost always, so the economy just lines up its expansion phase to coincides with the regime change, and that is where the recessions end up.

How much does this cost?

Well take GDP, separate out its normal motion and compare it with the presidential motion, using variance. I would guess about a third of GDP is lost.

Can we fix this? Dunno.

What about England?

Smaller economy, an Island, buffered between Europe and America. Who knows? I would give them a break.