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Fiscal Stimulus Does More Harm than Good

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9/12/2011 10:54:33 PM
Posted: 5 years ago
My view is that fiscal stimulus does not do any good for the economy. Businesses and consumers plan for the long term. So, some short term increase in disposable income will not lead to new hiring.

Consumers will mostly save their gains (Permanent Income Hypothesis) and Businesses will interpret any increase in consumer demand as temporary, so they will not make long term investment decisions and hiring based on this.
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