Another nail in the “more fiscal stimulus is needed” view

In the comments section of my “Nominal Spending determines outcomes, not Fiscal Stimulus”, Mark Sadowsky wrote:

I’m curious what the graphs of fiscal deficits might look like. The effect of a discretionary fiscal stimulus would be even more dramatic in terms of fiscal deficits, since part of it often consists of revenue reduction. This might make an even stronger graphical demonstration (not proof of course, but evidence nevertheless).

And here they are:

And it is those same three countries with the lower deficits (and lower deficit increase) that have the highest increase in both nominal spending AND RGDP. Sweden even has a fiscal surplus!

3 thoughts on “Another nail in the “more fiscal stimulus is needed” view

  1. I’m not as impressed as I would have expected. Certainly the results are strongly negative with respect to Sweden and the US but I am surprised by how huge the swing to deficits are in Poland and Australia.

    Nevertheless it was an interesting exercise and I’m grateful for you taking the time to explore it.

    I should also note that I have often posted your blog posts in place of my own refusal to start my own blog. You’ve saved me a lot of effort.

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