Wednesday, November 3, 2010

Fact vs. Fantasy

How does the US experience with fiscal policy during the last few years compare with other countries? It's now widely (if wrongly) accepted that fiscal policy was tried in the US, but failed. Paul Krugman has some charts that compare the US and German experience. The US has done better regarding output than Germany, which is widely viewed as having eschewed fiscal expansion in favor of austerity. The irony is that, as the data shows, real government expenditures grew more rapidly in Germany than in the US.

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