That is, little or no relationship. Countries in which spending grew a lot in 2007-9 (e. g., Chile and the Slovak Republic) and countries in which spending fell (e. g., Israel and Switzerland) grew about equally much, on the average, in 2009-11.
It turns out that spending in 2009-11 is related to GDP in 2007-9--the higher the GDP growth (or smaller the losses), the higher the subsequent spending growth. In other words, countries that had suffered the most in 2007-9 tended to subsequently follow "austerity" policies.
An interesting point is that some of the countries that are generally regarded as examples of austerity had substantial spending growth in 2007-9, 2009-11, or both. For example, these numbers show Ireland and Estonia as having tried stimulus in 2007-9. Laffer used IMF data, and I did too. I don't know is the mismatch reflects a problem in the IMF data, or in what "everyone knows," or some technical issue in the definition of government spending.
No comments:
Post a Comment