"By using defense spending as an overall proxy for government spending" what does this study by the Mercatus Center at George Mason University really show?
In response to the financial crisis, Congress passed the American Recovery and Reinvestment Act (ARRA) in February 2009, which totaled $789 billion in government spending. President Obama reassured anxious Americans that this spending would “revive our economy” and “create 3.5 million jobs” over the next two years.
A new study by Harvard professor Dr. Robert Barro and Charles Redlick tests this claim and the economic theory that underlies it by using defense spending as a proxy for overall government spending. Their research finds that greater government spending does not aid the economy; in fact, it causes decreased consumption and investment.
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