Stimulating weekend reading
If you pray hard enough, you can make water run uphill. How hard? Why, hard enough to make water run uphill, of course!
– Robert Heinlein
Kevin at Lakeshore Laments brings to our attention today an op-ed in the Wall Street Journal by two economists from the National Bureau of Economic Research, Robert Barro and Charles Redlick, who point out that government stimulus spending doesn’t have the same punch to the economy as reductions in the tax rate:
The existing empirical evidence on the response of real gross domestic product to added government spending and tax changes is thin. In ongoing research, we use long-term U.S. macroeconomic data to contribute to the evidence. The results mostly favor tax rate reductions over increases in government spending as a means to increase GDP.
But if we close our eyes and wish really, really, hard…