Bank of Canada to government: cut tax, don’t spend
A Bank of Canada paper published on Tuesday shows that tax cuts are more effective than government spending in the long term due to their impact on consumption and investment.
Sarah Zubairy, the author, uses Bayesian techniques for US data to estimate a micro-founded dynamic stochastic general equilibrium model to investigate the multipliers effects of fiscal policy on spending and debt.
Zubairy finds that government spending has a large stimulative effect on impact, which decreases
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