Government Growth

capitolIn 16Q3 and in 16Q4, the combined addition to real US GDP by all levels of government (federal, state and local) was 0.07 and 0.06 of a percentage point respectively. That was weak. Government spending should consistently contribute roughly 0.40 of a percentage point to GDP growth. More than that, and government spending is fiscally stimulative, less than that, as has been the case of late, is fiscally contractionary.

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  1. I would love to know more about how government spending impacts GDP. Do you have a deeper explanation of how it works or can you direct me to a good source for more info on how government spending affects the GDP? For instance does it matter what the Government spending is for?

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