--- [EMAIL PROTECTED] wrote: > In a very simplistic macro view, raising public expenditures or lowering > taxes (in the short run) were both considered "expansionist" fiscal > policies--at least in the sense that both increase public sector > deficits... they are equivalent policies.
The expansionist effect is reduced when the deficit is financed from domestic borrowing, which displaces private domestic consumption or investment. > However, in real world policymaking, republicans prefer lower taxes and > democrats would rather have more expenditures... as if they were different > policies. > > Does this partisan/ideological asymmetry have any real effect? As such, no. But there are also supply-side effects from reducing taxes, which would provide a larger effect, and the long-run domestic effect depends on what the funds are spent for, i.e. military abroad versus domestic consumption or governmental investment. > More practically, what is easier to get, lower taxes or higher > expenditures? Higher expenditures are easier, since tax cuts require lengthy deliberations and are more difficult to reverse. Spending can be focused on local "pork." > Does this apply to the federal as well to the state level? I don't see why not. Fred Foldvary ===== [EMAIL PROTECTED]
