Monday, August 2, 2010

Ricardian Equivalence

Ricardian Equivalence is an attempt to explain why deficit spending does not boost economic growth.

This is important, because Keynesian economics says deficit spending does boost economic growth.

The better question is not whether deficit spending does or does not boost growth, but rather why in some periods is does, and in other periods does not. The Arthurian alternative to Ricardian Equivalence is Credit Efficiency, and it answers that question.

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