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Automatic stabilizers at work. Deficit still far too low at $500 billion, which is about 3.5% of GDP.


Non TARP Fiscal Balance ()


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2 Responses

  1. Warren, how high, in your estimation, do non-tarp deficits have to go in order to start having a positive effect on aggregate demand.

  2. While each dollar has a ‘positive effect’ i know what you are getting at and i’d guess somewhere aound 7-10% of gdp on an ongoing basis, which can taper off to 5% ‘automatically’ as gdp grows and the economy recovers

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