research

Paper: Macroeconomic Effects from Government Purchases and Taxes

In September, Harvard economists Robert Barro and Charles Redlick published a working paper titled:  Macroeconomic Effects from Government Purchases and Taxes.  The paper looks at past economic data in order to develop a multiplier for government expenditures.  Their research found for defense spending, the multiplier was 0.6-0.7–until the unemployment rate reach 12%, at which time it neared one.    Barro and Redlick also found higher marginal tax rates reduced growth in GDP.

© 2009 Tax Policy Forum.