By Matthew Kahn
Do the Republicans believe in Keynesian economics? As I read this piece , it crossed my mind that the Republicans may have read Keynes and now seek sharp budget cuts because they believe that this will reduce aggregate demand in the short run, raise unemployment and hurt Obama’s re-election prospects. The budget cuts coalition may have other members who follow the Wall Street Journal’s “crowd out” logic that public sector deficits displace private sector investment. While these two different groups have different economic models in their heads, they form a convenient coalition seeking smaller deficits now.
Matthew Kahn is a Professor at the UCLA Institute of the Environment, the Department of Economics, the Department of Public Policy and the Anderson School of Business.
[Cross-posted at Same Facts]