Friday, August 21, 2009

Your Reading for the Weekend: Government “Stimulation” Doesn’t Shorten Recessions

Economist Alan Reynolds has a nice op-ed up today addressing the question of whether governmental efforts to prevent or shorten recessions actually work.  Upon a review of the historical evidence, he concludes (prepared to be shocked) that they don’t.

Reynolds goes further, arguing that the inverse is in fact true: recessions last longer and are more severe where governments intervene more.  Reynolds evidence for this latter point (at least that which he presents in the piece) is weaker and not terribly persuasive, but the article is still a good read for exploding the myth that governmental stimulus efforts have had great success in combating economic downturns.

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