Tax cuts or government spending

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Tax cuts or government spending? Debate heats up over best way to grow the economy

Larry Summers has an article in "Foreign Affairs" saying we're in a very unusual situation, you call it the liquidity trap. He calls it secular stagnation.

He says that the only way to grow the economy right now is really vigorous public spending or tax cuts. Ultimately, the argument is indeed over whether growth and jobs can be created faster by tax cuts or by government spending.

Would you agree? Discuss the effects of these policies in the short run and long run using Keynesian model.

Reference no: EM131099115

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