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Most people miss that the 'money' will get spent. This should lead to an income multiplier. Then hopefully to a reallocation of resources moving bureaucrats from administrative work to something else.


(Fiscal) income multipliers don't really exist (ie they are one) in an economy with a competent central bank that targets eg inflation or nominal GDP.

If whatever fiscal policy you have makes overall nominal spending go up (or down), that would have an impact on inflation, so the central bank will remove money from circulation (or add money to circulation) to counteract.

Thus neutralising any multiplier, you might naively expect.

(Also keep in mind that when you don't tax some money, it also gets spend or invested etc.)




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