Rathin Roy

Several economists have not too long ago argued for rising public expenditure, by way of deficit financing, to handle the present growth slowdown. This argument rests on the premise that elevated authorities spending would improve buying energy in the fingers of shoppers and companies and, thereby, enhance combination demand to bolster growth.

I wish to unpack the analytics of this argument. For those that contemplate the present slowdown to be “cyclical” (I don’t), that is an apparent textbook prescription — spend extra throughout downturns, much less throughout upturns. This …

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