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In the News

The fiscal multiplier of $2 trillion of stimulus spending

Geoff Riley

15th January 2021

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Here is a terrific piece in the Guardian from Professor Barry Eichengreen on whether the new Biden administration would be better spending $2 trillion on stimulus cheques to US households or use similar sums to fund critical infrastructure projects to create "long run" aggregate demand.

Part of the debate surrounds the behaviour of households in the wake of such a severe negative shock brought about by the pandemic. How large is the fiscal multiplier for different types of stimulus policy? Barry Eichengreen argues that a fiscal stimulus won't generate economic growth unless its accompanied by infrastructure investment to boost the supply side.

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Geoff Riley

Geoff Riley FRSA has been teaching Economics for nearly forty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD and Revision conferences in the UK and overseas.

@tutor2uGeoff

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