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Answer to Question #64983 in Economics of Enterprise for mo

Question #64983
We've seen that the government spending multiplier and the multiplier for changing taxes are different. For political and macroeconomic reasons governments often run balanced budgets. Suppose that G=T. Then suppose that the government increases spending and taxes equally to maintain a balanced budget. IE that:



\begin{align*}
G^{'}&=G+\Delta\\
T^{'}&=T+\Delta
\end{align*}

What is the value of the balanced budget multiplier. IE what multiple of delta does Y increase?



https://fred.stlouisfed.org/series/GDPC1



https://fred.stlouisfed.org/series/UNRATE
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