Spending multiplier, government (public expenditure multiplier)

The assumption that an amount of money spent by the government stimulates a multiple of private economic output because citizens keep the money rolling in the cycle. – However, it has been shown many times that the multiplier is often very small, even less than one. More precisely, this means that government spending programs (government stimulus programs) cost more than they bring in. Only if economic agents have favorable expectations will they spend the money they receive from the government in the domestic market, i.e. demand goods from domestic production rather than goods and services from abroad. – See economic stimulus program, Opel printing. – Cf. ECB Monthly Bulletin, December 2012, p. 90 ff.(model and reality in the multiplier model; numerous overviews; references).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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