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The Keynsian Multiplier – Does it Exist?
Monday, February 10, 2014 18:26
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Written by Dan Lieberman, Alternativeinsight
Can someone clarify a significant economic and well accepted proposition that bothers me?
The notion that the Keynesian multiplier means that “an exogenous increase in spending, such as an increase in government outlays, increases total spending by a multiple of that increase,” is troublesome. Is it possible to add one dollar to the money supply and magically turn it into more dollars? I don’t think this is possible. I believe economists have misinterpreted the multiplier. To me, if it is not a multiplier, then the multiplying factor can never be more than one.
Source: http://econintersect.com/b2evolution/blog2.php/2014/02/10/the-keynsian-multiplier-does-it-exist
