Standard “Public Policy” and Keynesian theory depends on the existence of a so-called “economic multiplier” effect – government spending is supposed to increase the size of the economy. By this method, government allegedly “primes the pump” or “bootstraps” the economy to greater and greater heights.
What if the received wisdom is wrong?
This study suggests – contrary to the expectations of the researchers – that we should be talking about a multiplier of less than one – government spending leads to less productive economic activity.
Imagine that. Papa Libertarian has been saying this for more than thirty years.