Tuesday, April 17, 2012

On Salmon on Koos


I don't get it at all. Koo and you agree that tax cuts won't stimulate as the money will be saved, but also assume that increased government spending must be financed by debt. Given the analysis, the solution is clearly increased government spending and reduced budget deficits financed by massively increased taxes.

In other words my advice for, say Rome, where I live, is raise my taxes.

Also note that the huge Spanish capital account deficit implies a huge current account surplus. The rest of the world is doing for Spain that which the Spanish government can't do. Spaniards are buying foreign bonds and foreigners are buying Spanish goods. This is part of the solution not part of the problem.

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