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This paper provides evidence that austerity shocks have long-run negative effects on GDP. Besides addressing the important gap in the growing fiscal research regarding the short time horizon of the estimations, this paper analyzes two other important assumptions made in the literature regarding...
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Based on neoclassical theory, cutting budget deficits has come to be seen as a principal way to increase long …
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consumption and the government spending multiplier, given that consumption and labor are somewhat complementary. -- Trend growth … ; price and wage staggering ; government spending multiplier …
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aggregate demand deficiency. We show that an increase in government purchases boosts GDP through a multiplier process, but the …
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