Simple Analytics and Empirics of the Government Spending Multiplier and Other "Keynesian" Paradoxes

Abstract

ABSTRACT~Factor supply increases (depresses) output for many of the same reasons that the government spending multiplier might be less (greater) than one.Data from three 2008-9 recession episodesthe labor supply shifts associated with the seasonal cycle, the 2009 federal minimum wage hike, and the collapse of residential construction spending -clearly show that markets absorb an increased supply of factors of production by increasing output.The findings contradict the "paradox of toil" and suggest that the government spending multiplier is less than one, even during this recession.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 8 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.