What’s the Fiscal Multiplier, UK Edition
The IMF have apparently converted to the Keynesian view.
Having found no inspiration from trying to think about how deficits could determine the level of nominal GDP, I took at look at the UK government spending data. This table shows the percentage growth over four quarters in the levels of nominal GDP, nominal government final consumption spending, and nominal government gross capital formation:
So… what’s the fiscal multiplier? I’d suggest these series are not strongly correlated.