During the Obama years, most conservatives were against fiscal stimulus and most liberals were for it. Now that President-elect Donald Trump has proposed a major boost in government spending, many commentators will feel urges to migrate to the opposite positions. In light of this ideological turmoil, we should keep a clear head on when government spending truly stimulates the economy.
The first principle is not to be fooled by increases in measured gross domestic product. A new Trump stimulus would probably boost GDP, but that doesn’t mean it would be working well.
Read Full Article »