Tuesday, July 21, 2009

Budget deficits and the world economy

Paul Krugman a href="http://krugman.blogs.nytimes.com/2009/07/15/deficits-saved-the-world/" writes about how government budget deficits have helped stop the recession being as bad as it would have been otherwise /a. The private sector's financial balance in the US changed by 8.2% of GDP. The private sector swung from borrowing massively to saving massively. This adjustment would have had a huge knock-on effect on the US economy and the world economy. However, the shock was counteracted by government spending - especially by the automatic stabilisers that kick in during a recession. If it hadn't been for these, we would have been in a worse state.div class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/38622711-9192763352255773815?l=vinospoliticalblog.blogspot.com'//div

technorati tags:
| |
More at: News 2 Cromley

No comments: