A Lesson from Paul Krugman

8 Things to Learn for 2/2/2009 #6

Here is the Nobel Prize winner with today's lesson on spending. You can read the entire thing by clicking here.

I don’t think Tyler understands what I (and everybody else) means by government spending. I don’t mean the government handing someone a rebate check; I mean the government actually, you know, buying something — say, building a bridge.

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If the government builds a bridge, the boost to aggregate demand comes not because people are “tricked” into feeling wealthier but because the government is building a bridge.

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I don’t know how a trained economist can make something this simple so complicated.