Wednesday, 28 January 2009

Krugman vs.Barro

Here are links for the items discussed in today's lecture. Robert Barro's piece "Government Spending Is No Free Lunch/Now the Democrats are peddling voodoo economics" in a recent Wall Street Journal arguing that the multiplier is less than one is here. Krugman's response and update (with the figure for house building and expenditure on cars before, during and after the war), basically makes the point that there was a war on. A fall in some types of expenditure is not totally surprising!

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